Staying stubbornly blindKorea’s automaking capacity is shriveling. According to the Korea Automobile Manufacturers Association, Korea’s motor vehicle output totaled 4,029,000 units last year to come down a notch to No. 7 in the world behind Mexico. It had slipped to No. 6 behind India in 2016.
High wages, low productivity and labor conflict ate into Korea’s capacity. GM Korea shut down one of its three production lines in Gunsan, North Jeolla, last year. Renault Samsung’s Busan factory may become the next to shutter. The average wage of factory workers in Busan is 20 percent higher than at the Nissan Kyushu plant under the same parent. But workers in Busan went on a partial strike 28 times over the last four months, demanding higher salaries.
José Vicente de Los Mozos, the deputy executive president of manufacturing and supply chain at Renault Group, sent a video message to employees of the Korean unit, warning that the car alliance cannot assign new models if the strikes continue. But the workers stayed defiant. They have planned two partial walkouts next week and will also mull a full strike. The unions of Hyundai Motor and Kia Motors also warned they will enter a general strike to protest a plan to open a new assembly line in a joint venture with the city of Gwangju that will pay sharply lower wages.
Automakers worldwide are undergoing restructuring to adapt to the new mobility environment of clean fuel, self-driving cars, ride-sharing and a slowdown in the global economy. Volkswagen, General Motors, Ford, and Nissan have all reduced their payrolls by thousands and underwent reorganization. Korean workers alone are chanting for higher wages despite low productivity. What automakers would really want to invest in such an unproductive environment?
The government cannot avoid responsibility. It has sided with the automaker unions, which earn nearly 100 million won ($88,968) a year and have done little to ease the rigidity in the labor market. At this rate, the Korean car industry is bound to collapse. Output will continue to fall and more factories will have to shut down. The collapse of the manufacturing sector will deal a critical blow on the economy. Busan’s economy has already been wrecked after the closure of the GM factory.
JoongAng Ilbo, Feb. 11, Page 30