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Hyundai Heavy Industries Held back by Cumbersome Labor Union System
Inquiries for New Orders Swamping Shipbuilder
Hyundai Heavy Industries Held back by Cumbersome Labor Union System
  • By Jung Min-hee
  • January 21, 2019, 10:22
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Hyundai Heavy Industries has been unable to finalize a wage deal reached last year due to the ongoing wage negotiations at a sister affiliate.

Hyundai Heavy Industries Co. is suffering from an internal problem, although it is swamped with new order inquiries from its clients from the beginning of the year. The company exceeded its goal for new orders last year and there is a rosy outlook that the number of new shipbuilding orders across the world will increase this year as well.

However, Hyundai Heavy has been unable to finalize the tentative wage deal reached last year as wage negotiations at Hyundai Electric & Energy Systems Co. have not yet been finished.

Hyundai Heavy’s management recently published an article in its in-house newsletter to draw attention to the serious side effects of a simultaneous voting on wage deals at the group’s four affiliates.

Hyundai Heavy’s management and labor agreed on a tentative deal on wages and collective bargaining in December last year after seven months of negotiations since May last year. However, they still have not scheduled a voting because the management and labor of Hyundai Electric & Energy Systems have not reached a tentative agreement yet.

Hyundai Heavy Industries Group has been maintaining a “four companies and one labor union” system since three companies were spun off from Hyundai Heavy in April 2017. Accordingly, there will be no vote on wage deals until all of the four affiliates reach a tentative agreement. Hyundai Heavy said, “We are asking the labor union to make a rational decision so that the tentative agreement can be voted as soon as possible.”

The confrontation between the management and labor of Hyundai Electric does not seem to end readily as they are waiting for a court ruling. The conflict between the two heightened to the max because of a prolonged dispute.

Hyundai Heavy is struggling with the deepening conflict between the management and labor at the spin-off firms. Hyundai Heavy Industries Group won an order for two 158,000-ton crude oil carriers from a shipowner in Europe on Jan. 18, its first order for the year. An official from the group said, “We are swamped with inquiries for new orders from shipowners from the beginning of the year.”

The market conditions are not so bad. U.K.-based research firm Clarkson Research Services estimated this year’s global order quantity at 34.40 million CGT, up more than 20 percent from 28.59 million CGT last year. Considering this, Hyundai Heavy Industries Group set its new order goal in the shipbuilding sector for this year at US$15.90 billion (17.85 trillion won), up 21 percent from a year earlier. An industry watcher said, “If the conflict between the labor and management does not ease, the expected revival of the domestic shipbuilding industry can go up in smoke as well.”