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Labor and Management of Renault Samsung Motors Fail to Reach Collective Bargaining Agreement
Deadline Passes Without Agreement on Wage
Labor and Management of Renault Samsung Motors Fail to Reach Collective Bargaining Agreement
  • By Michael Herh
  • March 11, 2019, 11:14
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Workers of Renault Samsung Motors check a car in the assembly line.

The labor and management of Renault Samsung Motors failed to reach a collective bargaining agreement until March 8, a deadline set by the company’s parent, Renault Group of France. Therefore, Renault Samsung Motors is highly likely to be excluded from the group's distribution of global production volumes next year.

The two sides had intensive negotiations from 2 p.m. to midnight on March 8, but they failed to hammer out a deal, said Renault Samsung Motors on March 10. March 8 was the day that Renault's head office set as the deadline for the labor-management negotiations.

The Renault-Nissan-Mitsubishi alliance has been making a plan to allocate production volumes to its global production bases since February. Renault Samsung Motors should immediately submit business plans to the group in order to win its new production volume. However, Renault Samsung Motors has been unable to make a proposal because no agreement has been reached on collective bargaining and wage negotiations.

Yesterday the management offered an incentive of one million won in addition to base salary maintenance to settle the negotiations, but the labor union rejected it. According to the management, the average wage of Busan factory workers rose by 2 percent to 3 percent each year, reaching 78 million won in 2017, up 20 percent from five years ago. Their hourly wage is higher than that of workers at Nissan’s Kyushu factory, and now ranks third among the alliance’s 46 factories around the world. The labor union staged a partial strike 42 times for a total of 160 hours, incurring more than 170 billion won in damage to production, the management asserted.

The failure to conclude the negotiations is expected to impact the global headquarters’ allocation of production volume following the planned discontinuation in September of the production of the Nissan Rogue. Some experts say that it is already late for Renault Samsung Motors to receive allocated production volume from the global headquarters of Renault. Above all, if the United States slaps hefty tariffs on cars from Japan, Europe, and Korea, it will stir bigger and stronger waves. Nissan's voice has grown inside Renault Group since Carlos Ghosn stepped down as chairman amid a management dispute. The Nissan Rogue produced by Renault Samsung has been exported to the United States. If the United States imposes heavy taxes on cars from Korea or Japan, it would be more advantageous to produce the model in the United States, not in Korea or Japan.

Most of all, sales of Renault Samsung Motors shrank 26.9 percent in the first half of 2018, Renault Group said. Among the major regions, Korea is the only regional production base that suffered such a steep drop in sales except those in Africa (-4.5 percent). The management says that if Renault Samsung Motors production cost goes up amid the drop in sales, it will not be easy for the automaker to secure its desired volume from the global headquarters.