Auto companies unite with unions as car sales hit a wall

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Auto companies unite with unions as car sales hit a wall

The coronavirus pandemic is forcing automakers into survival mode, with both Renault Samsung Motors and GM Korea announcing Tuesday that the companies have officially resolved long-standing disputes with their labor unions over last year’s wages to avoid potentially crippling strikes.

GM Korea said Tuesday that its unionized workers voted to endorse a tentative wage agreement reached between union leaders and management last month. The deal was approved by 53.4 percent of 7,233 unionized workers. More than 500 union members didn’t vote.

The union and management agreed to freeze wage levels and provide no performance-based pay. In lieu of the union’s original demands for the wage hikes, GM Korea said it will provide “incentive vouchers” for workers to buy new GM Korea cars. The vouchers allow GM Korea employees to get discounts of between 1 million and 3 million won per person ($820 to $2,500), depending on the price of the model.

GM Korea and its employees also agreed to continue working together to launch 15 all-new or face-lifted models through 2024 to regain sales targets in the local market. The two sides said they will hold additional talks to discuss management’s legal actions against employees who participated in unauthorized strikes last year.

GM Korea’s management has emphasized that increased labor costs could undermine the profitability and competitiveness of the automaker. The company’s sales for the first three months this year fell 24 percent from the same period a year earlier, to 86,528 units. GM Korea is reported to have lost production of 20,000 vehicles due to the union’s strikes last year.

Also on Tuesday, Renault Samsung announced that its unionized workers voted to accept an agreement on last year’s wages reached earlier this year. The Busan-based automaker said 70.2 percent of its roughly 1,700 union members voted to accept a wage freeze and bonus of 8.88 million won per worker.

The Korean unit of French automaker Renault Group said the deal was made as a consensus of two parties to combine efforts into overcoming the impact of the coronavirus outbreak on the automobile industry’s sales and profits levels.

Increased labor costs could have been especially risky for Renault Samsung Motors, which has experienced deep cuts to sales and production since last year.

In 2019, Renault Samsung Motors sold a total of 90,591 cars, down 34 percent from 137,208 in 2018.

Following the end of its manufacturing contract with Nissan for Rogue SUVs last year, Renault Samsung has been asking Renault Group to assign some orders to be processed at the Busan factory. But Renault Samsung Motors said its French parent company has been reluctant to assign more volume, as higher wages for Busan plant workers could threaten the cost competitiveness of vehicles produced at the Korean plant.

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