Local Unions Highly Likely to Collide with Korean Battery Makers in US

As Korean battery companies such as LG Energy Solution, Samsung SDI, and SK on head to the United States, they are faced with an unexpected problem –- the emergence of a local labor movement. They are pressuring Korean battery companies over wage negotiations. If the situation becomes prolonged, it will weaken Korean companies’ productivity and give them trouble in recruiting workers.

On July 9, the United Auto Workers (UAW) released a white paper on Ultimate Cells, a joint venture between LG Energy Solution and General Motors (GM). “Workers are being paid low wages and have unsafe working conditions,” the UAW said in the white paper.

The UAW is a national union headquartered in Detroit, North America’s largest auto manufacturing center. It once boasted a membership of more than 1.5 million members, but now only has 400,000 members as the U.S. auto industry has passed its heyday.

Korean battery makers believe that the UAW sees the entry of Korean battery companies, led by Ultimate Cells, into the U.S. as the last chance for their long-awaited resurrection. The white paper came out as the UAW and Ultimate Cells are in the midst of wage negotiations. It aims to put pressure on Ultimate Cells and extend the UAW’s reach beyond cars to batteries. Both the U.S. and Korean battery industries are nervous about the aftermath of this incident.

A bigger problem is that not only LG Energy Solution’s joint venture but also other battery companies such as Samsung SDI and SK on have no choice but to face the same problem. The UAW has wrapped up wage negotiations with most U.S. automakers. On the other hand, with respect to Ulltium Cells, the UAW claims that negotiating standards set earlier are invalid for Ultimate Cells because it is a joint venture between GM and a foreign company (LG Energy Solution).

U.S. industry insiders believe that if the UAW’s influence spreads to the battery sector, it may significantly lower the productivity of North America’s leading electrification companies. Especially, if local public opinions against these companies deteriorate, Korean battery makers that invested in the United States on the promise of the U.S. government will face major difficulties in recruiting workers. Some argue that the U.S. government should be more proactive in addressing this issue early in the process.

“A big hurdle is facing Korean battery makers’ efforts to contribute to local communities by providing high wages of more than US$20 per hour and expanding social contribution activities and in-house welfare and amenities,” said a Korean battery industry official. “Korean battery makers need the U.S. government’s mediation and response and the Korean government’s diplomatic and administrative support. Then, when the two governments help Korean battery makers, they will be able to protect battery industry ecosystems that hold Chinese battery makers in check based on their strong battery sales in the United States.”

Their concerns grow due to their plans for additional investments. LG Energy Solution will establish and operate joint ventures with GM, Stellantis, Hyundai and Honda in the United States. It will also be in talks with Ford and European automakers about establishing additional joint ventures in North America. Samsung SDI will also grow its JV partnership with GM and Stellantis. And SK on has partnered with Ford.