Trucker strike is grinding industries to a halt

Construction is temporarily suspended at an apartment construction site in Seoul due to the ongoing trucker strike, which has been preventing shipments of cement. [YONHAP]

Business lobbying groups say the trucker strike is causing major problems to important industries, and petrochemical companies’ naphtha crackers and cement makers’ kilns may have to stop if it continues.

The Korea Enterprises Federation, Korea Cement Association, Korea Iron & Steel Association, Korea Petrochemical Industry Association and Korea Automobile Manufacturers Association held a press conference Tuesday to bemoan the strike.

Members of Cargo Truckers Solidarity, which is part of the Korean Confederation of Trade Unions, have been refusing to deliver products and blocking gates at distribution centers since June 7. The union wants an extension to the so-called freight charge system, a system that dictates minimum payments to truck drivers that is supposed to end in December.

According to the Korea Petrochemical Industry Association, petrochemical companies are shipping out only 10 percent of their normal level of products since the strike began June 7.

Kim Pyung-jung, head of the association’s industrial research division, said some steam crackers, which produce base materials such as ethylene and propylene, could stop operation as soon as Wednesday if the strike doesn't end.

There are eight companies including LG Chem and Lotte Chemical that operate crackers.

“If crackers stop operating, other production facilities using their products will also have to stop,” said Kim. “If that happens, the industry is expected to lose over 300 billion won ($233 million) each day.”

Cement companies are being hit hard because half of the nation's 2,700 bulk cement trailers are driven by union members. Since the strike, cement makers' shipments have been only 13 percent of normal levels.

As inventory builds, production facilities will be forced to suspend operations. Cement has to be stored in special storage containers known as silos, and companies are running out of silo space.

There are 45 cement kilns in Korea, and two have already stopped operating. Korea Cement Association Managing Director Kim Young-min expects half of the kilns to stop operating by this weekend if the strike continues.

“Almost every [cement] company has cut down their shipments,” said Kim. “More than half of ready-mix concrete makers have stopped production because they can’t get the cement they need.”

Ready-mix concrete is made by mixing cement, water and aggregates.

Major steel companies such as Posco haven’t been able to ship an average 35,000 tons of steel products per day. On Monday, Posco temporarily stopped production lines making wire rods and cold-rolled steel at its Pohang Steel Mill after it ran out of inventory space.

As of Monday, carmakers haven’t been able to ship 5,700 cars, according to the Korea Automobile Manufacturers Association. Hyundai Motor employees have been moving cars manufactured at its Ulsan plant to nearby storage yards. Production at the factory, which normally makes 6,000 cars a day, has been cut in half.

The Korea International Trade Association received 236 complaints from companies about the trucker strike between June 7 and Monday.

The most common complaint was about delays in delivering products to be exported at 26.7 percent, or 63 cases.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]