It is the largest deficit in 16 years, but also strikes… ‘Ultimate’ to the union [韓 철수 카드 꺼낸 르노]

XM3 could not meet the delivery date in Mongni even after receiving the export volume to Europe

‘Brazil factory card’ could be taken out such as large-scale restructuring and wage cuts

Industry “If you don’t want to step on Ssangyong Motor, you need to show a forward-looking attitude”

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On the 9th, the video message from Renault Group’s vice chairman of manufacturing and supply, Jose Vicente de los Mosos, can be summarized in two main ways. One is cost reduction through rapid implementation of the’survival plan’ such as manpower reduction, and the other is compliance with production delivery. The automobile industry is interpreting this as a warning that if competitiveness is lost due to failure to implement this, the Busan plant may actually leave Korea by reducing production volume.

It is said that if the Busan plant fails to recover its competitiveness in a situation where the automobile industry faces rapid changes, such as a decline in automobile sales due to the novel coronavirus infection (Corona 19) and the transition to eco-friendly cars, it could be subject to restructuring at the group level.

◇ How serious is Renault Samsung = Renault Samsung’s only factory in Busan sold 116,000 cars last year. This is less than half of the maximum production of 230,000 units in the Busan plant. Of the 116,000 units, 90,000 units were domestically sold and the remaining 26,000 units were exported. The models produced by the Busan plant are QM6, XM6, and XM3 (New Arcana). The problem is that there is no room for further increase in domestic sales of Renault Samsung due to the rising popularity of Hyundai and Kia and Imports. In the end, in order for Renault Samsung to achieve the production volume of 230,000 units, there is no way other than expanding exports, and the XM3 is at its core. A Renault Samsung official said, “The XM3, a small sports utility vehicle (SUV), is a popular vehicle in Europe. It is a kind of opportunity for the Renault Group to allocate the entire export volume of XM3 to the Busan plant. If the cost competitiveness cannot be restored, the Renault Group will be very disappointed.” Vice-Chairman Mosos emphasized the implementation of the survival plan through the video message on the day as a warning that the success or failure of XM3 could be directly related to the fate of the Busan plant.

Renault Samsung announced the implementation of the’Survival Plan’ to improve profitability when the number of units sold last year reached the lowest level in 16 years and the operating deficit in 8 years became clear. The core of the plan is △Strengthening domestic market profitability △Strengthening XM3 cost competitiveness and stable supply △Reduction of executives and implementation of desired retirement.

◇ Renault Group Accelerates Global Factory Restructuring = Renault Group unveiled a management strategy plan of’Renaulution’ that shifts the management direction focusing on enhancing profitability in the face of a major turning point in the automotive industry. Renault Samsung’s’Survival Plan’ is a restructuring of Renault Samsung’s version to implement Renault. In the’Renolution’ strategy plan, Renault Group pointed out South Korea along with Latin America and India as regions that need to strengthen profitability.

In fact, Renault Group is undergoing restructuring around the world, and in Brazil, it has already taken 1,300 people into account and cut 20% of the wages of new employees. In addition, the period of wage and collective agreements with the labor union was increased to 4 years.

The reason that the Vice Chairman Mossos issued a warning while discussing “new methods” in the video message is the reason why the interpretation is to convey the message to the union that the Busan factory could step on the train of the Brazil factory.

Renault Group’s diagnosis is that the deterioration of the competitiveness of Renault Samsung’s Busan plant is a serious situation. Renault Group evaluated that the production competitiveness of the Busan factory fell from 5th in 2019 to 10th last year among 19 global factories.In particular, the factory manufacturing cost score was ranked 17th as of last year. This is largely due to the rise in fixed costs. From September 2014 to March last year, production of Nissan logs at the Busan plant was terminated, and the production schedule at the Busan plant was significantly reduced due to inventory adjustments since September last year, resulting in a rise in fixed costs.

“The manufacturing cost of the Busan plant is twice as high as the capture production cost of the Spanish plant,” said Mossos, who clearly shows the situation at the Busan plant. In fact, from 2016 to 2018, when Nissan logs were in full swing, the competitiveness of the Busan plant competed for first or second place, but after the production of logs was stopped, it went downhill. In the end, it is impossible to recover competitiveness unless the export volume of XM3 is increased through cost reduction and delivery compliance.

In the automobile industry, as Vice Chairman Mosos’ remarks are a strong warning against the union that is undergoing strike procedures, the union also needs to show a forward-looking attitude. “There is no guarantee that Renault Samsung will not step on the trains of Ssangyong Motors, which are in a legal management crisis,” said Lee Hang-gu, a researcher at the Korea Automobile Research Institute.

/ Reporter Kim Neung-hyun [email protected]

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