Tuesday, February 18, 2020
Renault Samsung Facing Production Cliff, Disputes Over Downsizing
This Year's Output Likely to Be Slashed
Renault Samsung Facing Production Cliff, Disputes Over Downsizing
  • By Michael Herh
  • September 9, 2019, 14:02
Share articles

The production line for the Mid-sized SUV Nissan Rogue at Renault Samsung

With the labor union of GM Korea going on its first full-fledged strike in 22 years, the labor and management at Renault Samsung Motors are at loggerheads over voluntary retirements. At Renault Samsung, downsizing is inevitable due to reduced production, but its unionists are expected to make all-out efforts to protect their jobs.

The automaker's production of Nissan's Rogue SUV for the North American market for this year has been reduced from 100,000 units to 60,000 units. Renault Samsung which produced 210,000 units last year is expected to see a significant drop in production this year due to a drop in production stemming from a walkout in the first half of this year and a cut in production of the Nissan Rogue.

In fact, the management of Renault Samsung recently decided to reduce its hourly production from 60 to 45 units after October, and asked the unions to take part in follow-up negotiations about downsizing among others with them. The management made this move in order to prepare for next year rather than this year.

Renault Samsung is aiming to produce 160,000 to 180,000 units this year but Rogue production volume (60,000 units) will be excluded next year. Production of the new model XM3 for the European market which will replaces the Rogue is also unclear at this time. Originally, the Renault Group of France planned to decide the XM3's European export production plant for the XM3 for the European market in March, but has postponed it as Renault Samsung’s labor dispute has become prolonged.

It is difficult for the Renault group to select Renault Samsung’s Busan factory for XM3 production as the plant cannot guarantee stable production due to labor-management issues and can incur high logistics cost. The Renault Group's European plants such as those in Spain and Turkey, are also want to produce the XM3 to be exported. At present, it is unknown whether full-scale production will be able to begin in the second half of next year even if the production volume is allocated to the Busan plant.

In consideration of the current situation, Renault Samsung has been receiving voluntary retirement applications from blue-collar employees since Sep. 6. "There is no limit to the number of applicants and will only accept voluntary applications," a Renault Samsung official said. “The reception of voluntary retirement applications is far from an artificial restructuring.”