SEOUL, Sept. 8 (Korea Bizwire) — Reckitt Benckiser Group PLC said Thursday it will shut down its plant in South Korea this month as its sales were hit hard by the humidifier sterilizer case that took over 100 lives.
Oxy Reckitt Benckiser (or RB Korea), a wholly owned unit of the British consumer giant, will close down its plant in South Korea on Sept. 30 and focus on compensating the victims of the sterilizer disaster and restoring consumer confidence in its products, RB Korea Country Manager Park Dong-suk said in a recent interview with Yonhap News Agency.
The humidifier sanitizer case, one of the worst scandals involving a consumer product using chemicals, came to light after four pregnant women died of lung problems from unknown causes in 2011.
A government-led investigation later confirmed a connection between scores of people who died of lung problems and the chemicals used to clean household humidifiers. The tainted products were sold from 1994 until they were recalled by the government.
“The planned closure of the Icksan plant came as our sales in South Korea plunged by more than 90 percent,” he said in his first interview with local media after he took office in December.
Faced with sharply reduced sales that nosedived to 2 billion won (US$1.8 million) per month from 20 billion won, RB Korea cut its workforce to 160 from 260 in February. The plant’s shutdown will further reduce the number by 50 percent, leaving only office and sales employees in Seoul, the executive said.
As most of the victims died or became seriously ill after using its toxic humidifier disinfectants, RB Korea has decided not to sell products that could affect respiratory organs for the time being, Park said.
Instead, the company plans to continue to bring in products such as the sore throat medicine Strepsils, Gaviscon antacid and Durex condoms as they are produced in its plants in Britain and other countries, he said.
RB Korea said it may ask local original equipment manufacturer (OEM) companies to produce some of its products in South Korea while importing others from its overseas plants.
An OEM is a company that produces parts and equipment that may be marketed by another manufacturer.
Beyond the business side, Park said RB Korea will be fully responsible for compensating the victims, while making its utmost efforts to regain consumer confidence in its products over the long term.
The company voluntarily set up a 5 billion won fund in 2013 to help the sterilizer victims who were exposed to the toxic chemicals in the product.
It will also inject 67.4 billion won into another fund set up by the Seoul government for the same purpose on Friday, he said. The environment ministry ordered RB Korea to pay into the 125 billion fund, with SK Chemicals and other Korean companies also required to pay allotments.
SK Chemicals sold the deadly humidifier disinfectants and provided harmful raw materials for the sterilizers to RB Korea. Other companies such as Aekung Group and Shinsegae Group also manufactured the same products and distributed them.
RB Korea, meanwhile, has already paid 130 billion won in compensation to 166 victimized people who used the company’s products as of Thursday.
Reckitt Benckiser entered the Korean market by acquiring Oxy in 2001 and started doing business under the company name of Oxy Reckitt Benckiser. Oxy was one of a number of Korean manufacturers of humidifier sanitizers.
The British group currently has production facilities in 55 countries and a reported $13 billion in global sales in 2016.
“Before the humidifier incident, Reckitt Benckiser Group earned 1.5 percent of its total sales in South Korea, bigger than Japan but smaller than China,” the country manager said.
But, he continued, “We will put restoring consumer confidence before anything else, though it may take some time.”