Employees Are Owners at Hyundai Hysco

Employees are rising up to new challenges-

The Hyundai Hysco Ulsan factory has been in operation based on OEM supply agreements with partner companies since January this year. The Ulsan plant has 11 partner companies, all of which were founded by former employees of Hyundai Hysco like Mr. Shim. And they are all invested in the companies as shareholders.

Hyundai Hysco decided to introduce outsourcing last year to enhance its competitive edge. With the decision, it began to be supplied with finished products made by companies that were set up with severance payments by its former employees. The money was mostly used to purchase existing equipment. Hyundai Hysco made up for any shortfall by leasing the workplace and facility.

To help new companies that have little management experience, Hyundai took up the responsibility of purchasing raw materials and devising a work plan.

There was substantial unrest among employees who had to leave the company at first. In the end, 120 out of 340 employees chose early retirement and others moved to the company’s newly established Dangjin factory.

Kim, Byeon-seon, the CEO of Hyudai Pipe, said, “I was very anxious about leaving the company, but the new company was very attractive because it guaranteed lifetime employment,” adding, “Most importantly, it promised extra benefits if we exceeded the production target.”

Company Focuses Its Energy on Developing Advanced Technology-

Since employees became owners of the company, the company’s productivity has improved substantially. With 10-25 percent fewer workers compared to last year, the company’s productivity remains almost the same.

Since Hyundai Hysco promised payment for production surpassing targets, the production target has been revised upward.

At the pipe assembly line, which used to require some 80 workers in the Ulsan plant, 55 people are now working on it. Given that all of these workers are new recruits with the exception of 17 people, Kim expects productivity to rise even further.

With no need to worry about tension in the relationship with labor unions, Hyundai Hysco can now focus all its energy on developing advanced technology. Pipe manufactured at a steel tube factory is reprocessed at a factory nearby before it is supplied to Hyundai Kia Motors.

Deputy general director of Hyundai Hysco Park Sun-bo said, “There is no difference in the expenditures because the labor cost is simply replaced with outsourcing cost. But in the long run, annual increase in wages of some six percent can be saved,” adding, “Now that predictable and stable financial management has become possible, we are planning to produce high value-added products by focusing our investment on research and development.”

Sung-Won Joo swon@donga.com