Talking sense into HHI’s union

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Talking sense into HHI’s union


The United Automobile Workers (UAW) is a leading labor union representing workers in the U.S. auto industry. In the late 1970s, the union had more than 1.5 million members. It’s also considered one of the reasons for the fall of General Motors, Ford and Chrysler.

In the mid and late 2000s, the UAW pressured automakers to promise medical care for retired members. GM had to spend $1,500 dollars for every car sold on medical subsidies. It was only natural that the Big Three were defeated by German and Japanese rivals in competitiveness and performance.

The collective bargaining demands by Hyundai Heavy Industry’s union presented on April 5 reminded me of the UAW.

The union demanded a 96,712 won ($83.91) increase in base pay (a 5.09 percent increase from the previous year), a larger annual bonus, automatic reinforcement of new hires equivalent to the number of retirees and the removal of the peak wage system.

The plan also includes overseas training programs for more than 100 members annually and a subsidy of 3 percent of base pay for the personal pension fund. Hyundai Heavy Industry estimates it will need an additional 400 billion won annually to meet the demands.
The union also wants to influence the management and appointment authorities. In the name of transparent management practices, the union wants to nominate one external board member and be informed about deliberations at board meetings.

Of course, it is a demand proposal for negotiation and is subject to further modification. But still, it is so far from what is realistically possible.

Hyundai Heavy Industry has had deficits for nine consecutive quarters, from the fourth quarter of 2013 to the fourth quarter of 2015. The accumulated deficit is 4.9 trillion won. This year, it has gotten only three orders for ships. More seriously, there are no signs of improvement in the shipping business.

For the 44th anniversary of the company on March 22, Chairman Choi Gil-seon and CEO Kwon Oh-gap called for unity to overcome the crisis in a letter to employees. “As managers, we are overwhelmed by the desperation of the workers for the survival of the company,” they wrote.

A union can only exist if a company survives. While the union is not solely responsible for worsening performance, it needs to help in the revival if the company. The UAW used to be known for its hardline stance, but last year, the union persuaded members who demanded a strike to stand down, and instead brokered a four-year contract with GM and Fiat Chrysler. It convinced workers with an argument about protecting the security of their jobs. Hyundai Heavy Industry’s union needs to do something similar.

JoongAng Ilbo, April 8, Page 29

*The author is a business news reporter at the JoongAng Ilbo.

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