SK Chemical's Suwon Plant to Be Converted to Residential Area

SK Chemical, a representative local enterprise in Suwon, is relocating to another city while its factory site is being converted to residential use and will be developed as a residential complex.

According to Suwon City and SK Chemical on the 17th, the company faces difficulty in sustaining continuous operational losses exceeding 10 billion won annually, while Suwon City continues to receive complaints from large-scale residential complexes surrounding the factory and finds zoning change to residential use inevitable for industrial land reallocation.

◇ Suwon City "Zoning change inevitable due to apartment density and civil complaints" = Gyeonggi Province held a urban planning subcommittee meeting on the 7th and conditionally approved the '2020 Suwon Urban Master Plan (Draft)' containing the conversion of the 0.472㎢ SK Chemical factory site in Jeongja-dong, Suwon, to a residential area.

In exchange for converting the factory site to residential use following the factory relocation plan, the condition is to provide 40% or more of the entire site as public land.

Suwon City stated, "When the first urban master plan was established in 1969, the area surrounding the factory was on the outskirts of Suwon, but now large-scale residential complexes such as apartment villages have been developed, making it difficult to maintain it as a factory site any longer."

The SK Chemical area is surrounded by residential areas including apartment complexes in the Jeongja 1, Cheoncheon 1, and Cheoncheon 2 districts developed through large-scale land development projects, and the Jeongja housing redevelopment district designated last year and the Imok-dong Type 1 district unit planning zone, with continuous civil complaints being filed against the factory.

As residential complexes have been built, a total of 303 civil complaints related to SK Chemical have been filed with Suwon City from 2001 to present, with the majority consisting of identification of sources of odor generation, river pollution occurrence sources, inquiries about health hazards of pollutant substances, demands for factory relocation, and inquiries about relocation timing.

SK Chemical also installed pollution prevention facilities and improved processes to resolve residents' complaints, but since it is a factory located in the middle of a residential area, fundamental problems resulting from this remain unresolved.

Beyond these issues, the city explains that zoning change is inevitable because it falls under the Seoul metropolitan area's congestion control zone, where designation of new industrial areas is unavoidable, and therefore it is necessary to relocate industrial zones equivalent to the SK Chemical factory site being converted to the Suksaek-dong Suwon Regional Industrial Complex (3rd Complex).

◇ SK "We will return profits to Suwon citizens" = SK has decided to relocate the SK Chemical factory to other regions due to continuing operational losses and civil complaints, as it determined that maintaining the factory is no longer feasible.

According to SK, the Huvis (textile-related subsidiary) factory, which accounted for 60% of the total operation, was closed in January last year, and with increasing operational costs, SK Chemical's factory is now incurring operational losses exceeding 10 billion won annually.

Additionally, to escape continuing profitability deterioration and secure competitiveness in part of the fine chemicals business, the company has been promoting production base relocation to China since last year, and SK Chemical's facility operation rate is currently at 25%.

An SK official stated, "We have determined that it is practically impossible to maintain the SK Chemical factory, so we are pursuing relocation to other regions, and even if the factory site is developed as a residential complex, we plan to return some of the development profits to Suwon citizens."

The official added, "While there is some opinion pointing out this is 'special favors to large corporations' since SK can earn hundreds of billions of won through land price increases and apartment sales, SK's profits are not that significant due to various factors such as apartment price ceiling systems, and we are considering ways to best repay Suwon citizens as a company that originated in Suwon."

Like SK's donation of the Seonkyung Library built with 11.7 billion won in Sinpung-dong, Paldal-gu in January 1995 to the city, it is reported that SK has a plan to donate a civic arts hall worth approximately 50 billion won.

◇ What is SK Chemical? = SK Chemical is a chemical and synthetic fiber manufacturer under the SK Group, which started as Sunkyung Synthetic Fiber in Suwon in 1969. The company name was first changed to Sunkyung Industries in 1988 and then to the current SK Chemical in 1998.

The factory covers 380,000㎡ with 460 employees (including 176 at the research institute) producing fine chemicals, acetate yarn, polyester resin, antifreeze, IT materials, and pharmaceutical ingredients. With the closure of the Huvis factory and relocation of some operations to China, overall sales, operation rate, and workforce compared to 2003 have been declining rapidly each year.