When the HMM (Hyundai Daesang Ship) labor union prepared for the first strike since its founding in 1976, the largest shareholder, the Industrial Bank (12.61% stake), is deepening concerns. This is because if a strike occurs, it will not only disrupt the business normalization of the company that has just entered the main track, but also damage the export companies as the logistics disruption becomes a reality.
According to industry sources on the 28th, the HMM Federation of Labor Unions voted on 369 members for a wage increase this year on the 26th. As a result, the strike was approved with 97.3% of votes in favor.
Accordingly, the HMM union plans to enter into industrial action such as assembly or refusal of boarding from January 1 of next year if no consensus is found at the 2nd labor-management mediation meeting on the 31st.
Until now, HMM’s labor and management have been in conflict over the wage increase plan. While the union expects an increase of more than 8%, the management proposes a 1% increase, saying that it is difficult to raise wages rapidly under the creditor management system. The union has been participating in the pain sharing for the past six years, such as freezing wages, and is sticking to the meaning that the company cannot accept the company’s proposal as the company has achieved the highest performance ever this year.
In fact, the stock price predicts that HMM will record sales of 6.19 trillion won and operating profit of 820 billion won this year. It means that it is on the verge of achieving a surplus in 10 years since 2010.
However, the KDB side looking at this is not concealing the uncomfortable feelings. This is because HMM is the only nationality in Korea and is expected to adversely affect the industry as a whole.
Already in related industries, there are concerns about the logistics disruption caused by HMM’s strike. Amid the spread of the new coronavirus infection (Corona 19) at the beginning of this year, major shipping companies reduced their ship operations due to concerns about a decrease in trade volume.
Fares are also showing an upward curve. The Shanghai Container Freight Index (SCFI), the world’s container freight rate indicator, recorded 2641.87 as of the day, breaking a record high every day.
Accordingly, the KDB side expressed serious concern about the possibility of a disruption in shipping and logistics due to future disputes due to wage negotiations between HMM labor and management through an unusual position on the 17th. He urged labor and management to work together to find a solution as soon as possible.”
“HMM entered the joint management of creditors (Korea Development Bank and Korea Maritime Development Corporation) in October 2018 and agreed between the labor and management to suppress wage increases as much as possible until business normalization is achieved.” “To increase competitiveness, large-scale public funds were provided. He also pointed out that the situation where there is a need for smooth support for shipping and logistics to vitalize the national economy.
As such, it is the second time after GM Korea that the KDB publicly expressed concern over the labor-management conflict of a managed company. The bank explained that it is because they recognize the importance of the matter.
In particular, creditors such as the Korea Development Bank have invested large-scale public funds into HMM with the aim of rebuilding the shipping industry after the bankruptcy of Hanjin Shipping in 2016. It became the largest shareholder through an investment conversion of 1.2 trillion won, and after that, as the industry did not recover, in 2018, it invested an additional 2.6 trillion won to acquire permanent bonds and signed an MOU for high-strength restructuring.
In addition, although HMM is gradually recovering its competitiveness in recent years, it is diagnosed that there is still a long way to go inside the KDB. Earlier, Chairman Lee Dong-geol also evaluated the necessity of integrating Korean Air and Asiana Airlines, saying, “HMM has entered the path of normalization after efforts,” but commented that “it cannot keep up with the market share when it was with Hanjin Shipping.” .
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Korea Development Bank expresses concern over HMM labor-management wage negotiations
However, the Korea Development Bank’s position is that further intervention is difficult. Although it is the largest shareholder, it is judged that it is not desirable to directly engage in issues of the union and management.
An official from the Korea Development Bank said, “We are closely monitoring the progress of the negotiations between HMM’s labor and management,” and “I expect both sides to draw a reasonable conclusion considering the impact on the industry as a whole.”