A very British tragedy
Surprisingly, the three causes that undermined the competitiveness of the British automobile industry have reappeared in the Korean car industry. According to the Korea Institute for Industrial Economics and Trade, the research and development (R&D) expenditures against sales, stand at a mere 2.8 percent. Researcher Maeng Ji-eun studied the R&D intensity of six countries and concluded that Korea was ranked at the lowest among the six competitors. Germany’s figure was 6.2 percent.
Despite the situation, Korea’s labor movement is more radical. In the past 10 years, the unions of three Korean carmakers — Hyundai, Kia and GM Korea — have been on strike for a total of 345 days. GM Korea is to close the Gunsan factory because of low productivity, but the union insists that it cannot give up its members’ benefits.
The bureaucracy of the government is similar to the British government 50 years ago. The Korean government has provided subsidies for environmentally friendly cars since 2006, but 90 percent of key parts are still imported. Collective agreement clauses are backward, and there is no leadership to nurture the future automobile industry. At this rate, the Korean disease may be the term that replaces the British disease.
While Korea is going backward by a half century, the United Kingdom got over the British disease. It did not obsess over the number of jobs and focused on securing technology for future vehicles. Regulations were removed to attract foreign investments, and Nissan, Toyota and Honda factories moved. The unions of the assembly plants in the United Kingdom were only on strike for one day in ten years. When a worker at Hyundai Motors makes one car, four cars are produced at Vauxhall Motors.
Kumar Bhattacharya advised British Prime Minister Margaret Thatcher on industry, technology and labor issues and took the lead in treating the British disease. He said that the production of internal combustion engines is meaningless, and future automobile technology will create jobs and wealth. If we don’t listen to his experience, the closure of General Motor’s Gunsan factory will only be the prelude to a tragedy.
JoongAng Ilbo, March 28, Page 33
The author is an industrial news reporter of the JoongAng Ilbo.