Busan factory may be abandoned… Why did Renault Group give an ultimatum?

Renault Group pointed out to the employees of Renault Samsung’s Busan plant that the manufacturing cost is twice that of the Spanish plant, and sent an’ultimate reminder’ saying, “If we do not fulfill our promises, we will find a new method.”

Jose Vicent de los Mojos, vice chairman of manufacturing and supply of Renault Group, warned through a video message to employees of Renault Samsung’s Busan Plant on the 9th, “If we do not keep our promise to increase our competitiveness, we will find an alternative.” It is interpreted as meaning that the production of vehicles in Korea, including the export volume of the small sports utility vehicle (SUV) XM3, can be stopped.

Vice Chairman Mojos pointed out that Renault Samsung’s competitiveness has seriously declined. He said, “Compared to the capture produced in Spain, the factory manufacturing cost of the Busan plant is twice that of Europe,” he said. “If the manufacturing cost of the factory is twice that of Europe and transportation costs are added, it is not suitable to produce a vehicle in Korea and deliver it to Europe.” Explained. He added that “the employees of the Busan plant will also feel it.”

Vice Chairman Mojos said, “At the time of our visit last year, the Busan plant promised to improve competitiveness to secure exports to Europe for New Arcana (XM3), and believe in that promise, we persuaded the top management to bring in Europe, but the promise was not fulfilled.” There is an urgent need for improvement,” he stressed.

He argues that the Renault Samsung Busan plant must keep its promise to improve its competitiveness in order to facilitate exports of New Arcana to Europe. He demanded three promises that the Busan plant should keep: △quality △production cost △observance of delivery date. The Busan plant’s production quality is satisfactory enough, but he warned that the Korean plant could be abandoned unless production costs and delivery times are improved.

According to Renault Samsung, the Busan factory’s factory manufacturing cost ranking was ranked 17th among 19 factories in the world within the Renault Group, ranking only in the lower part. Vice Chairman Mojos said, “The Busan plant is bound to have a high transportation cost burden due to distance limitations.” “The Busan plant must produce New Arcana and release it in Europe at the same level of manufacturing cost as the Spanish capture. This should be observed by the Busan plant. I’m responsible for doing it.”

He said, “The Busan plant must ensure that sales in the European market do not interfere with stable production and delivery.” It is pointed out that immediately after the launch of New Arcana, if production disruption occurs due to a strike, etc., the market may be neglected without enjoying the new car effect. There is a high possibility that Renault Group will not allocate a new car because of distrust to Renault Samsung.

He also emphasized the importance of Renault Samsung’s’survival plan’ to strengthen competitiveness. Vice Chairman Mojos said, “We faced a serious problem and you know how to solve it.” “The survival plan that Renault Samsung is working on is a way to increase the competitiveness of the Busan plant and continue the future.”

The Renault Group announced last month its’Renolution’ strategy to improve profitability. In this announcement, Brazil, which, along with Korea, was designated as a region that needs to improve profitability, has already cut 1,300 workers and cut wages for new employees by 20%. The period of wage and collective agreements with labor unions was also extended to four years.

At the same time, Vice Chairman Mojos said, “The guidelines are clear, and every effort must be made to comply with them.” He warned, “If the Busan plant does not fulfill the promises that must be kept, it will find a new way.”

Sesung Oh, reporter of Hankyung.com [email protected]
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