Hanwha Aerospace's Daejeon facility is under scrutiny to determine if it will be the first in the defense industry to be subject to the Serious Accident Punishment Act. While many experts believe that applying the law, which holds management accountable for safety violations leading to fatalities, is unlikely due to the nature of the defense sector, there are calls for strict penalties given that the facility has recorded 13 fatalities from major accidents over the past decade.
Despite a significant increase in performance during the ongoing defense supercycle, safety-related investments at Hanwha Aerospace have reportedly accounted for only 0.03% of total revenue.
On June 2, the Daejeon Police Agency, the National Forensic Service, the Ministry of Employment and Labor, and the Korea Occupational Safety and Health Agency began a joint investigation into the cause of the explosion that occurred at Hanwha's Daejeon facility. This facility is crucial for developing missile propulsion systems and tactical guided weapons, including the multiple launch rocket system Cheonmu and the long-range surface-to-air missile L-SAM. Hanwha stated that the explosion occurred during a cleaning process involving tools contaminated with gunpowder.
Under the Serious Accident Punishment Act, if a workplace safety violation results in a fatality, management can face penalties. Business owners or responsible executives can be sentenced to over a year in prison or fined up to 1 billion won, while corporations can be fined up to 5 billion won. The recent incident, which resulted in five deaths during a safety-related cleaning process, presents a challenging situation for the company. Hanwha Aerospace has previously experienced explosion incidents in 2018 (five fatalities) and 2019 (three fatalities).
The key issue is whether the company fulfilled its safety management obligations. Currently, investigations are underway regarding the allocation of safety management personnel, budget planning, execution, and procedures. If it is proven that safety incidents occurred due to pressure to increase production amid rising export volumes, the top management could face serious repercussions. Hanwha Aerospace operates under a dual leadership structure, with Vice Chairman Kim Dong-kwan, the son of Chairman Kim Seung-yeon, overseeing business strategy, while CEO Son Jae-il manages operations.
According to Hanwha Aerospace's 2025 Sustainability Management Report, the safety and health investment budget for 2024 was 3.5 billion won, representing only 0.03% of total revenue (11.24 trillion won). This marks a 51.4% decrease from the 7.2 billion won allocated for safety in 2023, raising concerns about a possible safety complacency. A company representative stated, "Safety and health investments are only recorded under 'safety,' and the actual expenditure includes various items such as explosion-proof facilities, automation of hazardous processes, and replacement of aging equipment, so the total is much higher. The Daejeon facility is in the process of implementing measures to minimize accidents through automation and the unmanned operation of hazardous processes."
Meanwhile, CEO Son Jae-il emphasized in a message to employees that the management team will take this incident as a painful lesson to create a safer working environment and strengthen the organization.
* This article has been translated by AI.
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