Manufacturing suspension crisis…Car industry in warning condition
Choi Yong-soon | cys@dt.co.kr | 2017-07-17 19:04:59
Finished car industry expected to enter strike
[Digital Times, Choi Yong-soon] The car industry is deepening in the wake of a strike by automakers. Korean car industry has been suffering from the THAAD (high-altitude missile defense system • THAAD) retaliation, reinforcement of protection trade, and Korea-US free trade agreement (FTA) renegotiation pressure. The car industry is in total collapse now in the second half of the year.
According to the industry sources on July 16, Hyundai Motor union`s striking vote passed, followed by strikes from Korea`s union. Hyundai Motor, which has maintained emergency management through foreign exchange, is expected to suffer losses as well as deteriorate earnings in the case of unions strike, resulting in new car production disruptions. Hyundai, the world`s biggest automobile maker, has been suffering more than KRW 3 trillion last year due to strikes in the US and China. If the strike occurs again this time, the Hyundai Unions will continue to strike for six consecutive years. The Hyundai Motor union is demanding a total employment security agreement in addition to paying a salary of KRW 150,483 (excluding upgrades) and a bonus payment of 30% of net profits (including employee stock ownership).
GM Korea union has foreseen to strike from this week immediately. There are prospects that if GM unions push the strike, GM Korea will be at the crossroads of life and death, with production and sales plummeting and James Kim`s resignation. The union decided to strike for the first time among the finished car makers on July 7, and is confronting the company, demanding a monthly salary increase of KRW 150,883 per month, a bonus of 500 % of regular wages (KRW 4,247,221), and realization of various allowances.
Kia Motors union also declared a breakdown of negotiations at the end of last month and applied for a dispute settlement with the central labor committee earlier this month. Soon, the company will decide whether to strike. The Kia union claims that it should increase the total wage, including the bonus to the regular wage, which is the standard of the overtime allowance.
Meanwhile, Renault Samsung Motors, which has been in dispute for the third year, is not likely to negotiate this year. Like GM Korea, it is necessary to secure global competitiveness as an affiliate of foreign headquarters, so it is difficult for the company to raise wages as required by the union. Especially, this year, labor unions are expected to take a long time to reach a consensus because they are demanding that they regulate work intensity, allocate manpower, and form a consultative body to control production.
The car industry is embarrassed by the strike. The industry, which has been in a cliff due to intensifying competition with domestic and overseas negatives, is making every effort to improve earnings in the second half of the year, including the launch of new models, but concerned that all efforts will be inevitable if labor-management confrontation intensifies. The car industry suggests that the domestic automobile industry will face the greatest crisis. It has been pointed out that the Korean automobile industry will be shaken by the decline in production and exports as well as deteriorating profitability.
An industry expert stated, "The worse the market is, the union has to win the agreement with the company through genuine consultation and pledge the next. However, now the labor union is strengthening the political struggle with the new government`s pro-labor. In the case of the crisis cannot be handled wisely, the competitiveness of Korea`s automobile industry will be forced to retreat."
[ copyright ⓒ The Digitaltimes ]
[Digital Times, Choi Yong-soon] The car industry is deepening in the wake of a strike by automakers. Korean car industry has been suffering from the THAAD (high-altitude missile defense system • THAAD) retaliation, reinforcement of protection trade, and Korea-US free trade agreement (FTA) renegotiation pressure. The car industry is in total collapse now in the second half of the year.
According to the industry sources on July 16, Hyundai Motor union`s striking vote passed, followed by strikes from Korea`s union. Hyundai Motor, which has maintained emergency management through foreign exchange, is expected to suffer losses as well as deteriorate earnings in the case of unions strike, resulting in new car production disruptions. Hyundai, the world`s biggest automobile maker, has been suffering more than KRW 3 trillion last year due to strikes in the US and China. If the strike occurs again this time, the Hyundai Unions will continue to strike for six consecutive years. The Hyundai Motor union is demanding a total employment security agreement in addition to paying a salary of KRW 150,483 (excluding upgrades) and a bonus payment of 30% of net profits (including employee stock ownership).
GM Korea union has foreseen to strike from this week immediately. There are prospects that if GM unions push the strike, GM Korea will be at the crossroads of life and death, with production and sales plummeting and James Kim`s resignation. The union decided to strike for the first time among the finished car makers on July 7, and is confronting the company, demanding a monthly salary increase of KRW 150,883 per month, a bonus of 500 % of regular wages (KRW 4,247,221), and realization of various allowances.
Kia Motors union also declared a breakdown of negotiations at the end of last month and applied for a dispute settlement with the central labor committee earlier this month. Soon, the company will decide whether to strike. The Kia union claims that it should increase the total wage, including the bonus to the regular wage, which is the standard of the overtime allowance.
Meanwhile, Renault Samsung Motors, which has been in dispute for the third year, is not likely to negotiate this year. Like GM Korea, it is necessary to secure global competitiveness as an affiliate of foreign headquarters, so it is difficult for the company to raise wages as required by the union. Especially, this year, labor unions are expected to take a long time to reach a consensus because they are demanding that they regulate work intensity, allocate manpower, and form a consultative body to control production.
The car industry is embarrassed by the strike. The industry, which has been in a cliff due to intensifying competition with domestic and overseas negatives, is making every effort to improve earnings in the second half of the year, including the launch of new models, but concerned that all efforts will be inevitable if labor-management confrontation intensifies. The car industry suggests that the domestic automobile industry will face the greatest crisis. It has been pointed out that the Korean automobile industry will be shaken by the decline in production and exports as well as deteriorating profitability.
An industry expert stated, "The worse the market is, the union has to win the agreement with the company through genuine consultation and pledge the next. However, now the labor union is strengthening the political struggle with the new government`s pro-labor. In the case of the crisis cannot be handled wisely, the competitiveness of Korea`s automobile industry will be forced to retreat."