[위기의 한국차]② Future car paradigm is changing… Strike → investment reduction vicious circle

Input 2021.02.02 06:00

勞 “Management is wrong, employees are forced to sacrifice” vs. “No investment due to hard-line union”
Gunsan economy hit by leaving employees of GM Korea and partner companies that spent 140 billion won a year

Amid the intensification of’carmageddon’, which began with the spread of eco-friendly cars, autonomous driving, and mobility services, the Korean automobile industry is facing a major restructuring. The automobile industry has a huge impact on the economy as a whole, with large front and rear effects such as maintenance, sales, and materials as well as manufacturing. In order for the automobile industry to become the strong backbone of the domestic economy, we will examine how the structure of the domestic automobile industry should be improved and in what direction the restructuring of companies should take place. [편집자주]

At the entrance of the old GM Korea Gunsan factory in Gunsan, Jeollabuk-do, a sign’Myeongshin’ is currently hanging. Myungshin Hyundai Motor Company (005380)As the primary partner of the company, General Motors (GM) took over it when it closed its Gunsan plant in 2018. Myung-shin signed a contract to produce 50,000 electric vehicles per year with Viton, which is called “Chinese Tesla,” but the plan became uncertain as Viton suffered management difficulties. Eventually, they recently found a new domestic customer, but the contract volume has shrunk to 3,000 units this year.

GM Korea’s Gunsan plant had an annual production capacity of 260,000 units. Founded in 1997, it was the newest GM plant in Korea, and was evaluated for securing world-class quality and productivity. At that time, GM Korea and its first- and second-tier suppliers who worked at the Gunsan plant amounted to 12,700 people, and workers and their families spent 140 billion won a year. As they scattered, the Gunsan economy continued to suffer.

Gunsan became an empty ghost town as the automobile and shipbuilding and chemical industries continued to suffer. The vacancy rate of small shopping centers in Gunsan soared from 9.2% in the first quarter of 2017 to 26.6% in the fourth quarter of 2020. The unemployment rate rose to 4.1% in the first half of 2018 when the Gunsan plant was closed, three times the unemployment rate of 1.5% in 2017. The unemployment rate in the first half of 2019 fell slightly to 3.5% and 2.2% in the second half, but the level before the closing of the Gunsan plant has not recovered.

There are concerns that GM Korea may withdraw from the Korean market at any time after the closure of the Gunsan plant. In particular, as the labor-management conflict recurs every year, the rumor of the withdrawal of the Korean market continues. This problem is the same not only for GM Korea, but also for Renault Samsung Motors and Ssangyong Motors. Hyundai Motor (005380)· In addition to Kia’s monopoly in the domestic automobile market, it is said that it has caught up with its own confrontational labor-management relationship. Because of this, criticism comes out that it was unable to focus on investment in future cars to keep pace with the changes and eventually faced a crisis.

The labor conflict between these companies is not the fault of either party. The union, which repeats strikes every year, is also a problem, but GM Korea and Renault Samsung use this as the cause, raising a sense of crisis. There is also an analysis that the industry is trying to rationalize the union strike under the guise of establishing a policy to withdraw from the Korean market internally.

Last year, the auto production of these three companies fell by nearly half compared to five years ago (950,000 units). According to the statistics of the Korea Automobile Industry Association, out of the total domestic automobile production of 3.56800 last year, the output of three companies was 570,300,000, which is only 16.4% of the total output of the three companies.

◇ GM and Renault warned Korean union several times… Eventually, I can’t get the electric car

General Motors (GM), the parent company of GM Korea, has been reorganizing its business since several years ago to focus on future car investment. In 2015, it withdrew the Chevrolet brand from Europe, and sold the Opel and Vauxhall brands in 2017. India, Austria and New Zealand also closed or withdrew factories one after another, and in 2018, GM Korea’s Gunsan factory was closed. Bupyeong Plant 2 also has no allocation after 2023.

At the time of the Gunsan plant crisis, the Korea Development Bank received a promise not to withdraw for 10 years by investing 800 billion won in GM Korea. However, whenever the conflict with the union continued, GM raised a sense of crisis by pouring out actions and comments with the mind to withdraw from Korea. In November of last year, when the union went on strike, the decision to invest 210 billion won in Bupyeong Plant 1 was suspended.

Stephen Kipper, president of GM’s overseas business division, also told Reuters, “The GM Korea union is taking the production as a hostage and is causing a serious financial blow. It is difficult to make various investments in GM Korea. If not, there will be a long-term impact.” In 2019, Julian Blissett, then president of the overseas business division, met with GM Korea executives and said, “If the strike continues and production is disrupted, we have no choice but to turn the supply overseas.”

In addition, GM is not allocating electric vehicle production to GM Korea. GM has decided to launch 20 types of electric vehicles by 2023, but the amount of electric vehicle production at its Korean plant has not been allocated until 2027. The voice of concern is even more worrisome because it is almost the same time as the 10 years that GM promised not to withdraw from Korea. This is because factories that cannot respond to the paradigm shift in the automobile industry are subject to restructuring. In addition, GM has decided not to produce cars with internal combustion engines at all from 2035.

Renault Group is also undergoing intensive restructuring. On the 14th of last month, the Renault Group announced’Renaulution’ and announced that it will promote profitability improvement in South Korea, Latin America and India. Immediately after the announcement, Renault Samsung is receiving hopeful retirement for all employees.

Until now, Renault Group has also sent warnings to the Korean union several times. Ahead of the end of consignment production of Nissan Logs at the Busan plant in 2019, Renault Vice Chairman Ross Mogers said, “If the strike continues, it is difficult to discuss the follow-up volume.” At the time of Vice Chairman Mogers, he visited Korea to mediate labor-management conflicts related to wage collective bargaining. The Busan plant did not receive follow-ups after the log production ended in March last year, and exports plummeted by nearly 80%.

◇ Ssangyong Motor’s’block strike’ wound is ongoing

In the case of Ssangyong Motor, the situation is different with GM Korea and Renault Samsung, but the industry sees Ssangyong Motor’s labor-management conflict as one of the reasons for the decline in competitiveness. In the case of Ssangyong Motors, the labor-management conflict intensified as Shanghai Motors in China withdrew in 2009, leaving behind a’predatory controversy. At that time, Ssangyong Motors laid out 2,646 employees, or laid out a self-help plan for unpaid leave. In response, the union occupied Ssangyong Motor’s Pyeongtaek plant for 77 days from May to August 2009 and held a’blocking strike’.

At that time, the police, unions, management staff, and officials from civic groups clashed, leading to bloodshed. In August of that year, the strike ended when the labor and management reached an agreement of 48% unpaid leave and 52% desired retirement, but 64 union members were arrested, and about 30 employees of Ssangyong Motor, hopeful retirees, families, and partner companies took their lives. Left a scar.

India’s Mahindra Group acquired Ssangyong Motor in 2010, and after the rehabilitation process was over, all unpaid leavers, dismissals, and hopeful retirees reinstated their jobs sequentially over the course of 10 years, ending May last year. However, when Mahindra canceled the investment plan to provide Ssangyong Motor with 230 billion won, and negotiations to sell Ssangyong Motor to the US automobile retailer HAAH Automotive Holdings were sluggish, Ssangyong Motor could not endure the liquidity crisis and went to court. Corporate rehabilitation procedure).

Korea Development Bank Chairman Lee Dong-geol recently said, “Unless the union writes a memorandum saying that it will not engage in industrial action until the surplus comes out, we cannot apply for a single won to Ssangyong.” Last year, Chairman Lee demanded a strong self-reliance, saying to Ssangyong Motor, “Be sure to live if you want to die, and if you want to live, you will die.” Currently, the Ssangyong Motors union is divided into the first union, the corporate union and the metals union, the Ssangyong Motors Branch, but the Ssangyong Motors union has not made a position on this.

Ssangyong Motor’s branch of the Korea Metals Union said, “What the KDB should do is not to demand unilateral concessions to the union, but to ensure employment and to secure a future vision.” “The result” is protesting.

Lee Hang-gu, a senior research fellow at the Korea Automobile Research Institute, said, “For foreign automakers, the head office does not share short-term plans in the Korean market, so the union is also uneasy.” It will become.” “Hyundai Motor is also trying to share the short-term plan of about 5 years with the union as much as possible in recent years,” he said. “Although the union needs to try to refrain from strikes, automakers should also work together.”