Delivery delays feared as Daejeon site, which accounts for 5% of company sales, suspends cleaning process; production to resume after cause determined
An explosion at Hanwha Aerospace's Daejeon factory that left seven people dead or injured has forced the defense manufacturer to halt part of its production operations.
Hanwha Aerospace partially suspended operations at the Daejeon plant following Monday's blast after the head of the Daejeon Regional Office of Employment and Labor ordered a work stoppage, according to industry sources Monday.
The order was triggered by a serious industrial accident — defined under enforcement rules of the Occupational Safety and Health Act as one resulting in at least one fatality. The work stoppage applies not to the entire factory but specifically to the cleaning process where the accident occurred, sources said.
Hanwha Aerospace said the impact on product manufacturing and research and development should be relatively limited, as the affected cleaning process is a post-production step used to clean work tools used in fuel injection.
However, industry analysts say some disruption to production and R&D is unavoidable, given that cleaning explosive material from work tools is an essential step in the manufacturing process.
The Daejeon plant is a defense facility where missile propulsion systems and tactical guided weapons are developed and produced. The multiple-launch rocket system Chunmoo and the long-range surface-to-air missile system L-SAM are among the weapons manufactured there.
Chunmoo in particular is considered one of Hanwha Aerospace's flagship weapons systems as the company expands its exports into European markets.
Hanwha Aerospace secured a contract worth 300 million euros ($349 million, approximately 520 billion won) from Estonia in December for six Chunmoo launchers and three types of missiles. In February, it signed a full-package supply deal with Norway — including 16 Chunmoo launchers — worth a total of $922 million (1.3 trillion won).
Concerns have been raised that the disruption could weigh on Hanwha Aerospace's sales and operating profit at a time when the company has been posting record earnings.
As of the end of last year, the Daejeon plant recorded sales of 1.3189 trillion won, accounting for 4.94 percent of Hanwha Aerospace's total sales of 26.7029 trillion won.
Hanwha Aerospace said it plans to resume production after determining the cause of the accident, conducting special on-site safety training and establishing measures to prevent a recurrence.
The Ministry of Employment and Labor formed a dedicated investigation team of about 20 people on Sunday and launched a full-scale probe into the cause of the accident.
"We do not know how long the work stoppage will last," a Hanwha official said. "We are working to minimize any disruption to production."
Hanwha Aero explosion: Will the Serious Accidents Punishment Act apply? Calls for accountability grow over 'third disaster in eight years' — Labor authorities and investigators are examining whether the Serious Accidents Punishment Act and the Occupational Safety and Health Act were violated in connection with the Hanwha Aerospace Daejeon factory explosion that killed five people.
https://biz.heraldcorp.com/article/10762359
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