Union picks solidarity over gains

Unionized workers at Hyundai Heavy Industries Group, including those from Hyundai Construction Equipment, protest in the rain outside the shipbuilding conglomerate’s office in Ulsan on Aug. 27. [HYUNDAI HEAVY INDUSTRIES]

In July, the labor union of Hyundai Construction Equipment, a subsidiary of Hyundai Heavy Industries Group that makes forklifts, excavators and other construction vehicles, was offered a fantastic deal.

The workers initially asked for a 73,373 won ($65) increase in their monthly wages and a 250 percent bonus. The company counteroffered with a higher figure: an 82,000 won ($73) raise and a minimum bonus of 450 percent that could be higher depending on operating profit. It would also give an extra bonus if the union immediately accepted the offer.

But there was a catch: The union was tied to the unions of other Hyundai Heavy companies. If they went on strike, the Hyundai Construction Equipment workers also had to walk out. If they hammered out a deal with Hyundai Heavy, workers at Hyundai Construction also had to follow it.

In the end, the labor union chose solidarity and continued its strike over wage negotiations.

“It’s not right to take [the deal] on our own when one side is suffering from voluntary retirement,” said Kim Hyung-gyun, the policy planning director of Hyundai Construction Equipment’s labor union, referring to cash-strapped Hyundai Heavy subsidiaries forcing workers to take early retirement. “Other than the wage issue, all four [labor unions] need to reach joint agreement on other demands.”

The workers at Hyundai Construction Equipment sacrificed a very good deal to keep in line with other unions. The company was expected enjoy operating profit of 6 to 8 percent next year. Hyundai Construction Equipment said it was able to offer a higher amount because it achieved its first-half target and wanted to compensate employees for their contribution.

“We’re facing downward risks in the second half due to several factors such as the U.S.-China trade war, rising interest rates in the United States and a shrinking market for construction equipment,” Hyundai Construction Equipment said in a statement. “[But] our principle is to compensate where there’s performance, and we should focus on boosting our company’s competitiveness by ending the wage negotiation early.”

Hyundai Construction Equipment is currently the best-performing company among the four that spawned from the creation of Hyundai Heavy Industries Group in April last year. The other three are Hyundai Heavy Industries Holdings, Hyundai Heavy Industries and Hyundai Electric.

After the April restructuring, the labor unions at the four companies agreed to stick together and only accept deals when all four of them can reach a consensus with their respective companies. The arrangement is unique in Korea Inc. The unions believe they will have more bargaining power if they work together.

Indeed, on Thursday, union workers at Hyundai Construction Equipment were not protesting against their own company, but the Hyundai Heavy Industries Group. Workers walked off the line for four hours at the Ulsan plant, demanding that Hyundai Heavy’s management withdraw its plan for unpaid leave.

Not all workers are happy with the arrangement. Some Hyundai Construction Equipment employees say each company has its own issues and can’t be lumped together. The management is also concerned that, if the strike continues, Hyundai Construction Equipment could lose its hard-earned growth momentum.

According to the China Construction Machinery Association, the equipment maker saw a 56 percent increase in excavator sales in the first half, mostly in China and India.

The company reported revenue of 1.85 trillion won in the first six months of the year and an operating profit of 137 billion won. The revenue increase was 40 percent year on year, and for operating profit, it was 75 percent.

On the other hand, Hyundai Heavy Industries, the shipbuilder and group’s namesake, reported a 33 percent drop in revenue and a 199.5 billion won operating loss during the same period.

BY KIM KI-CHAN [lee.hojeong@joongang.co.kr]