On the 10th, the truck of Mr. Kim, 67, sat idle with its cargo bed empty. For more than 30 years, he made money hauling materials and waste from the Yeosu National Industrial Complex. But as major plants in the Yeosu complex, Korea's leading petrochemical hub, halted operations under pressure from China's low-price offensive, Kim parked his truck, tinkered with it here and there, and sighed.
Kim said, "The number of people propping up logistics with their own trucks hasn't changed, but the volume coming out of the plants has been cut in half," adding, "Since the plants aren't running well, people like us can't make money."
The slump in Yeosu's petrochemical industry is hitting mid-sized and small company employees and sole proprietors squarely. While large corporations such as Yeocheon NCC and LOTTE Chemical have suspended operations at some plants and hunkered down, closely linked partner firms in petrochemicals are taking hits one after another.
Ulsan, another petrochemical cluster, is moving forward with the "Shaheen Project," into which 9.058 trillion won is being invested, but Yeosu has no notable investments or projects, and the situation is worsening.
The shock is most apparent in logistics. While sole proprietors like Kim, who take jobs from plants, sit in empty trucks, small logistics companies that export basic chemical products overseas also had no work, leaving worksites desolate.
According to the Yeosu Industrial Complex Joint Development Council of Yeosu City, the Yeosu complex's export performance last year was about 44.298 trillion won, down roughly 416.1 billion won from 2023 (about 44.7182 trillion won).
A person surnamed Choi, 39, who works at a logistics company, checked transport plans and then stepped out for a cigarette. The company where Choi works posted a net profit of 3.8 billion won in 2022, but that was halved to 1.5 billion won last year.
Choi said, "When a petrochemical plant makes products, we haul them out," adding, "Production is down even from a year ago, so there's nothing to load now, and we have many days waiting around at the company."
◇ The clear sky lays bare the petrochemical slump… small and mid-sized firms at the edge
The Yeosu complex, which normally trembles with engine noise and other mechanical sounds, was quiet in the air that day. As some corporations shut down plant operations and even halted expansion work, day laborers' footsteps disappeared. The distinctive chemical smell from machinery handling ethylene and benzene faded, and the sooty fumes lessened, leaving the sky clear.
A person surnamed Lee, 35, who works at the Yeosu complex, said, "My commute, which used to take about 50 minutes, has recently dropped to around 30 minutes." Lee added, "Even plant construction jobs to expand or service facilities have decreased, and day laborers have disappeared," and "This is squeezing not only large corporations but also mid-sized and small companies related to petrochemicals."
Mid-sized petrochemical firms, once considered stable workplaces in the region, are also wavering. Seomnam Petrochemical, which has about 130 employees in Yeosu, posted more than 1 trillion won in revenue from 2022 through last year, but last year's net profit fell 90% from 2022 (about 29.8 billion won).
Kumho P&B Chemicals, a mid-sized company affiliated with Kumho Petrochemical, logged 2.2024 trillion won in revenue and 231.4 billion won in net profit in 2023, but last year it managed only 1.6653 trillion won in revenue and 8.7 billion won in net profit. Petrochemical company PolyMirae also recorded more than 48 billion won in losses over the past three years.
◇ Fewer places to work… "Swift restructuring needed to prevent prolonged slump"
An employment crisis is looming. Near the entrance to the Yeosu complex, banners reading "Withdraw the layoffs of in-house subcontractor workers" and "Don't cut freight rates" reflected the tension in the industrial complex. The fallout has not subsided even after LG CHEM notified more than 300 in-house subcontracted temporary workers of layoffs and then agreed to a comprehensive succession of employment.
An in-house subcontracted employee at LG CHEM noted, "Some plants are old and difficult to operate, and one employee working there was not included in the employment succession."
The employee added, "Even just 2 years ago, there were about 25,000 people working at the Yeosu complex, but there's talk that the number has dropped by around 7,000," and "The mood is that jobs could disappear, and there aren't many suitable places to move to."
Industry insiders say swift restructuring is inevitable to prevent a prolonged slump. The United States, which faced a petrochemical crisis earlier than Korea, integrated oil and chemicals, while Japan consolidated or shut down unnecessary or inefficient facilities to concentrate production.
An industry official explained, "Since Korea is also an oil-importing country, Japan-style restructuring that reduces excess facilities is appropriate," adding, "The consolidation discussions now centered on large corporations should be expanded to mid-sized firms, and a special law should be enacted if necessary."