Renault Samsung May Lose Work Due to Continuing Labor Dispute

Renault Samsung Motors may lose contract manufacturing for models to be produced next year to Renault’s other production subsidiaries with no major breakthrough in negotiations on wage and collective bargaining agreements.

Intensive negotiations between the the company's labor and management held at the beginning and end of March all broke down, industry sources said on April 7. The two sides have narrowed their gap in wages through two intensive bargaining negotiations, but they still differ on the union's right to reject changes in workers’ roles or jobs.

"If the management makes a compulsory change in workers’ roles and jobs, the company should compensate workers for it to some degree," said an official of the Renault Samsung labor union. “The management should take measures such as withdrawing disciplinary actions against workers who are forced to change jobs. But the management says that they will take such measures but refuse to set them in the agreement."

While both sides constantly failed to narrow differences, they passed March 8, the deadline of negotiations set by Renault Headquarters in France. About one month has passed since March 8. Consignment production of the Rogue that Renault offered as an incentive for Renault Samsung is now off the table. The Rogue is a key export model that accounted for about half of exports from Renault Samsung’s Busan factory in 2018. Consignment production of the model schedule for September will be called off.

Now, Renault Samsung has to make the XM3, recently unveiled at the 2019 Seoul Motor Show, a success in order to survive. The model is scheduled to be produced in the first half of 2020 at the Busan plant. Although Renault Samsung plans to sell the model in Korea only at present, it has acquired the opportunity to expand its market to emerging countries as its markets have been changed to the Africa, Middle East, India and Pacific Headquarters as part of reorganization executed on April 1.

The purpose of the reorganization was clear. Renault Headquarters will pursue efficiency and profitability. Already in March, Renault Samsung sold 13,797 units, about half of the same month in 2018.