Losing Chances

Renault Samsung Motors' labor union members shout slogans outside of the south gate of the company's Busan plant on September 12, 2012.
Renault Samsung Motors' labor union members shout slogans outside of the south gate of the company's Busan plant on September 12, 2012.

 

Renault Samsung Motors, one of the companies representing the regional economy of Busan City, is about to lose its first chance for business stabilization in three years due to the labor union’s decision to go on strike. The city is urging the company to resolve the current situation through dialogue.

The labor union voted for the strike on July 5 with 90 percent of its members in favor, claiming that the management forced union members to sacrifice by compelling voluntary resignation and worsening their working conditions while disregarding the collective agreement concluded last year. The union is going to actually go on strike depending on the progress of the negotiations scheduled for July 8.

A lot of people are concerned about the situation, as the automaker’s three-year deficit could continue due to the walkout. Recently, the company was trying hard for the stabilization of its business. It sold a total of 36,977 cars in the domestic market during the first half of this year, posting a 40.5 percent year-on-year growth and climbing a notch in the local ranking to go for the third place. At the same time, Renault Samsung Motors starts to manufacture 80,000 units of the new Nissan Rogue from next month for export to the United States. Then, its annual export volume will reach 100,000 units.

The regional economy is expected to benefit greatly from the 60 percent increase in its production volume. In addition, the combined sales of the 80 or so subcontractors are estimated to increase by at least 600 billion won (US$592 million), to result in a much higher employment rate.

However, it is pointed out that the ongoing labor-management conflict and the resuling production delay could thwart the business stabilization. “We are planning to increase the number of our employees by about 20 percent in the latter half of this year in step with the stabilization,” said a local partner firm, adding, “I would like Renault Samsung to properly cope with the strike.”

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution