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No End in Sight for Automaker Strikes

Posted August. 28, 2006 07:26,   


With the strike at Ssangyong Motor Co. deteriorating, another strike at Kia Motors Co. is getting prolonged, increasing the damage to the two companies. It seems unclear how Ssangyong Motor will resolve the issue since a tentative agreement on wage and collective negotiation was rejected in the labor union’s vote and the internal conflict within the labor union has deepened.

Ssangyong says it has no more to propose after the tentative agreement, including the withdrawal of restructuring, job security guarantees and investing, was voted down.

Ssangyong yesterday announced that it couldn’t make any additional proposals due to a management crisis, making it even harder for the two sides to reach an agreement.

The sitting executive members of labor union are also in a difficult situation to exercise bargaining power.

Ssangyong’s labor union has been in the process of electing new labor executive members after some executive members were arrested and indicted on charges of receiving rebates in the process of selecting food suppliers in June.

Candidates for new labor executive members criticize the negotiations by the current senior labor union members as too lenient on the company and initiated internal strike on August 23.

The discussion between labor and management has to be held only after new labor executive members are elected on September 1.

Current labor union executives said, “We want to solve the issue before the new labor union executive team is formed but it is uncertain how labor members will decide on this matter.”

Ssangyong stated, “We have negotiated with the sitting executive members of labor union for 140 days but it remains to be seen how long it will take to discuss with the new executive members again from the beginning,” and expressed misgivings saying, “Managerial difficulties will worsen for as long as the strike period gets longer.”

Meanwhile, Kia Motors noted that it had 570 billon won in lost sales due to a partial strike that has continued for 19 days as of today.

The labor union is intensifying its strike by holding a partial strike six hours day and night on August 25 after striking four hours day and night.

Kia Motors said, “We’ve already recorded an operating loss of 15.1 billion won in the second quarter (April to June) and combined with operating income rapidly diminishing every year, it’s hard to accept the labor union’s demands.”

Kia Motors’ labor union is demanding a 106,221 won increase in basic pay, payment of 300 percent bonus and an increase in retirement age to 62 years old.

On the other hand, Kia Motors suggested a 73,200 won increase in basic pay, 1.0 million won in incentives for achieving quality and 150 percent bonus when employees fully satisfy production targets.

Kia Motors’ operating profit fell from 6.3 percent to 3.4 percent to 0.5 percent during 2003 to 2005 and it further declined to 0.2 percent in the first half of this year (January to June).