Doosan chairman’s ‘human-oriented’ management hits snag

On Monday, Doosan Group officially put its prestigious machine tool business unit on the market.

Despite the government’s plea to retain 51 percent stake to thwart attempts by foreign funds to buy it ― as the machine tools business is considered one of the country’s basic industries ― Doosan declined and said it would look for new owners to overcome its internal difficulties. 

Industrial observers assume the company will be sold for around 1 trillion won-1.2 trillion won ($850 million-$1 billion), with private equity funds such as MBK Partners, Morgan Stanley PE, SC PE and several others named as possible suitors.

The sale of one of the most profitable businesses of Doosan could have been regarded as an ordinary restructuring process if it were some other company at another time.

Instead, the news has highlighted the dire situation at Doosan Group and the apparent downfall of the leadership of the founding family represented by its chairman Park Yong-mann.

Park, who took the helm in 2012 succeeding his older brother Park Yong-hyun, was once perceived as a new-generation tycoon ― the handsome, outspoken and communicative manager had a legion of fans who were impressed with his slew of cheerful and perky Twitter comments and casual approach.

The 60-year-old was once hailed as one of the largest contributors to the 119-year-old Doosan Group’s shift in foundation ― from consumer goods and services-oriented business to a heavy industries-focused portfolio.

He led dozens of mergers and acquisitions, including the lucrative $49 billion-deal to buy U.S. construction equipment manufacturer Bobcat, which surprised the business world and became the subject of much research in business journals.

Under Park’s leadership, the company completed the establishment of “Doosan Way,” emulating the successful managerial canon of General Electric. Doosan’s TV commercials crying out for “our people, our future,” as well as aggressive recruitment, have branded Doosan as one of the most admired business enterprises in the country.

But with the global economic meltdown and other woes hindering business prospects, the company became the subject of market concerns from late 2012-2013, when the company’s core businesses slipped into the red.

And now, the chairman’s reputation as a managerial genius is at a crossroads.

The latest scandal erupted last week when it was revealed that Doosan Infracore, a key Doosan affiliate, has asked all its 3,000 staff to apply for a voluntary retirement program, which would grant 12-20 months of salary on top of severance.

Some company seniors were reportedly putting pressure on junior members, even freshmen, to resign, with threats that they would be forcibly dismissed if they do not comply.

After the news broke, Park on Dec. 16 told reporters that he had retracted the orders and exempted freshmen from the program, only to keep the junior staff who had spent three to five years on tenterhooks about their jobs.

Moreover, Park as well as his family members became the target of public scrutiny after it was reported that the affiliates struggling against economic woes were more loyal to Doosan Corp., the holding company of the group.

In 2014, Doosan Corp. posted a net profit of 65.3 billion won, but gave 82.7 billion won in dividends.

“More than 44 percent of Doosan Corp. shares are held by Park and his clan. It is believed that he received 4.5 billion won in dividends,” an industry pundit said.

“Paying dividends is a company’s responsibility, but paying 126.6 percent of the net profit? I can only guess it is an awkward coincidence that the founding Park family had massive stakes in the company at a time when the managers should take the primary responsibility for the bad performance,” he said.

“The business isn’t doing well, the human-focused philosophy isn’t valid anymore and the chief of the company is becoming the subject of distrust. It is going to be a long winter for Doosan,” he added.

By Bae Ji-sook (baejisook@heraldcorp.com)