Time for compromiseKumho Tire, Korea’s second-largest tire company, will go broke if it fails to submit to its creditors by Friday an agreement between management and labor to enable their embattled company to stay afloat. To save the company from insolvency, it must be sold to a foreign company as no domestic enterprise wants to purchase the struggling firm. Its union must consent to the idea of slashing wages. But the company’s militant union refused to accept the two conditions.
Lee Dong-gull, president of the Korea Development Bank, Kumho Tire’s main creditor, sent an ultimatum to the union Thursday saying that if Kumho cannot be sold to China’s Doublestar, a Qingdao-based tire company, it will go bankrupt because it cannot afford to pay promissory notes that expire on April 2. “In that case, even the Blue House cannot help Kumho,” he said. In a nutshell, the fate of the second-largest local tire company is in the hands of a labor union.
Unfortunately, the future of GM Korea also depends on its combative labor union. Without its support, as many as 300,000 local workers, including those working for contractors, will lose their jobs. General Motors headquarters is calling for a provisional agreement by Saturday between labor and management to normalize its operation in return for installing production lines for new car models and further investments. But the union is engaged in vehement protests, demanding that the company’s retirement age be extended to 65 and that no workers be laid off for the next 10 years.
The labor-friendly Moon Jae-in administration wants to pour tax money into saving Kumho Tire, but the public is dubious. GM Korea is an even tougher case as the government cannot wield influence because its major shareholder is a foreign company. Such grim realities stoke rumors that GM will end up withdrawing from Korea.
GM Korea’s decline can be attributed to not only mismanagement but also a domineering union. The Moon administration’s overly lenient stance toward unions hasn’t helped. For instance, the government is not willing to arrest leaders of labor groups even though they are on wanted lists for violent protests.
If Kumho Tire closes, it will wreak havoc on the economy of South and North Jeolla. If GM Korea, where 300,000 jobs are at stake, shuts down, it will hit our national economy hard. To avert such a disaster, the administration must get the unions to agree to a grand compromise with management. That’s the only way to avoid a crisis.
JoongAng Ilbo, March 30, Page 38