Labor Disputes, Sluggish Sales, Semiconductor Shortage
Three foreign automakers operating in Korea -- Renault Samsung Motors, GM Korea, and SsangYong Motor -- have been hit by a triple whammy: labor-management disputes, sluggish sales and a shortage of semiconductors.
Renault Samsung Motors' labor union will go on a general strike indefinitely starting from May 6. The labor union declared a full-scale war in response to the company’s plant closure. The union said it plans to stage a general strike until the company puts an end to the plant closure. The confrontation was triggered by differences over a salary raise. In wage and collective agreement negotiations for 2020, which have yet to be concluded, the labor union demands a 71,687 won increase in basic salaries and seven million won in bonuses, while the management has offered a five million won in bonuses and the reinstatement of 290 employees who were put on a circular leave.
"If we miss an opportunity this time, our future will become even more uncertain," said Dominique Signora, president of Renault Samsung Motors in a statement. "In the past, we had one more chance, but now we don't." His comment is understood as implying that Renault might quit its Korean business and leave Korea if the labor union does not back off. Renault Samsung Motors received a contract from its parent company in 2020 to produce the XM3 (export model name: Arcana) for exports to Europe. However, its sales in April plunged 28.6 percent from the same month of 2020 as a sales slump continued.
A storm is about to hit GM Korea now. Ahead of the 2021 wage negotiations, the labor union has finalized its demand for a basic salary raise of 99,000 won and 10 million won in bonuses. However, the company says it is difficult to accept the union's demand as it recorded an operating loss of 316.9 billion won in 2020. GM Korea suffered production losses of 25,000 units during negotiations in 2020 due to a labor strike. GM Korea's sales in April also fell 25.4 percent from a year before.
SsangYong Motor's restructuring is a big mess. Currently, the automaker is in the process of corporate rehabilitation due to a refusal by its parent company, Mahindra Group of India, to make an additional investment in its Korean subsidiary. Mahindra has decided to withdraw from Korea. SsangYong Motor also saw its sales plunge 35.7 percent on year in April.