En Route to Head-on Collision
Amidst the worst business crisis, the top management of Hyundai Heavy Industries said that they will secure competitiveness of individual businesses and dramatically improve its governance structure through split-ups. But the radical leadership of the Hyundai Heavy Industries Labor Union answered to the top management by going on a full-scale strike in 23 years, making the company’s future uncertain.
The Labor Union of Hyundai Heavy Industries staged a total of eight hours of a strike on February 23. Unionists went on a full strike in 23 years since 1994 the labor union staged a full strike. The labor union blamed the strike on a prolonged negotiation over a collective bargaining agreement and the company’s split-up plan. The labor and management of Hyundai Heavy Industries held a total of 74 negotiation meetings from May of last year to February 22 in 2017 but has failed to cut a deal.
Considering the fact that new orders sharply declined due to deteriorating shipbuilding industry conditions, the management is asking for pain sharing such as returning 20% of wages on the premise of job security. However, the labor union is rebuffing the company's suggestion, saying, “The management is demanding that only the labor be scapegoats.”
The labor union is not accepting the management’s proposal that the company will raise the average monthly salary by 123,000 won including 23,000 won for a rise in the salary class and give a 230-percent performance bonus and a 100% reward plus 1.5 million won. It is said that the package is at a “luxurious level” compared to other heavy industry companies where workers have little choice but to accept their companies’ decisions to return basic pays and freeze wages.
The decisive factor was the management’s announcement of last November to split up the company. At that time, Hyundai Heavy Industries announced that the company would split up itself into six independent corporations -- shipbuilding and marine, electric and electronics, construction equipment, green energy, robots and services. On February 27, the company will hold a meeting to approve an agenda on the split-up in Ulsan.
The announcement of the company's policy accelerated the labor union's entry into the National Metal Union. The union strongly opposes the company's plan, dismissing it as a way to wither the labor union and enable the owner family to succeed the management rights.
The Korean business world points out that there are loopholes in conditions for the conclusion of the collective bargaining agreement and just causes for the opposition to the split-up plan claimed by the labor union of Hyundai Heavy Industries. In particular, experts criticized the labor union, saying, “The labor union is blindly taking issue with the split-up plan to ‘die together’ even though the plan aims to empower the labor and management to ‘live together.’”
Hyundai Heavy Industries has the non-shipbuilding business such as construction equipment and green energy in addition to shipbuilding, its main business. From time to time, this fact has made the shipbuilding industry impede non-shipbuilding business operations and the former have a negative impact on the latter. Even if some regulations were applied to the shipbuilding segment only, the non-shipbuilding segment was disrupted because the two belonged to the same corporation.
Thus, Hyundai Heavy Industries has decided to employ a strategy of dividing the company into separate businesses and leading them to get on their feet. The strategy is reasonable in terms of the restructuring of its governance structure.
However, the labor union is repeating the claim that the company's survival strategy is to torpedo the labor union. "It defies common sense to split up the company to undermine the labor union," a Hyundai Heavy Industries official said. “The split-up plan is aiming at staying alive by improving the governance structure and ablating inefficient matters that arise from the operation of the shipbuilding and non-shipbuilding business in one body.
According to the management’s plan, the Hyundai Heavy Industries Group will transform itself into a holding company system that will turn the robot business into a holding company in terms of corporate governance. The ISS, the world's largest voting advisory body has advised shareholders to vote for Hyundai Heavy Industries' split-up. This is because the plan is beneficial to shareholders as its governance structure will become more transparent.
The management claimed that only about 800 of all unionists (about 15,000) took part in the walkout. Analysis says that such a low participation rate proves the labor union’s argument groundless.
Whether or not the labor union’s claims are logical, the Korean business world is taking the strike seriously. They are concerned that the Korean Confederation of Trade Unions (KCTU), which expanded its size with the addition of the labor union of Hyundai Heavy Industries, will talk the radical labor union into carrying out political activities while taking advantage of the current cluttered political situation.