A Japanese Auto Part Manufacturer Shut Down in Korea

Pacific Valve Industrial Company, a Japanese auto part manufacturer, closed down its operation in Korea at one p.m. yesterday. It is a rare case for a Japan-invested firm to shut down.

Gong, Seung-chan, general affairs manager at the Japanese firm explained yesterday, “The closing down of the company was attributable to a 24% loss in revenues at 14 billion won for this year, a possible deficit of the business, and the prolonged labor strikes in Korea.” He went on to say, “Over 70 days of labor disputes staring June 25 incurred the 2.8 billion won-worth damages to the company`s production. The company saw 70 million won in deficit in July this year and still expects to see the deficit further grow in August.”

Accordingly, the number of the closed-down foreign firms in Korea grew to eight.

Delegated to represent unionists at the Pacific Valve Industrial Company, steel workers from the Korean Confederation of Trade Unions (KCTU) are demanding a 40-hour workweek without pay cuts, protection of temporary workers, acknowledgement of union activities as well as a basic salary-raise by 125,141 won.

The company manager Gong said, “The union did not accept the company`s proposal and recommendation to return to work before Chuseok holidays. In the proposal, the company suggested adoption of the 40-hour workweek ahead of the deadlines set by the revised labor standards act, abolition of paid annual and monthly leaves to lesser degrees than the government regulation, and a 10% pay-raise, which is approximately 10,0000 won.”

On the other hand, Kim, In-jun, who represents the company union at the steel union, said, “We made our request at the minimum level considering the company`s managerial difficulties and in a way not to disturb non-union member employees` works. But the company only asked for workers` sacrifice and decided to close down the operation, which is not acceptable for us.”

Pacific Valve Industrial Company, manufacturing air-valves for auto tires, was established by Pacific Industrial Company, which is a Japanese multinational firm, in 1987. Hankook Tires and Kumho Tires are among its major buyers. With 101 staff workers, of which 70 are unionized, the Japanese firm generated 18.4 billion won in revenues and 1 billion won in net income last year.

Despite the shutdown of the auto part supplier, Tire manufacturing industry including Hankook Tires does not appear to be affected for the time being. Pacific Valve Industrial Company noted, “Our product supply will continue even after the production line closes down. We don`t see any problem in the short-term since we have inventory reserves for about two more months.”

Chan-Sun Hong Na-Yeon Lee hcs@donga.com larosa@donga.com