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Strike Has Ssangyong Motors Teetering

Posted August. 29, 2006 03:03,   


The Ssangyong Motor Company, burdened with accumulated losses and continued strikes, is facing a management crunch.

On August 28, the unionized workers of the company occupied its headquarters in Pyeongtaek, Gyeonggi Province and prevented management from working in defiance of the management’s decision to go ahead with restructuring. Police were summoned in case of an emergency.

Ssangyong Motor Company, which had a 103.4 billion won deficit last year, has already had 15,800 units (equivalent to 350 billion won) in lost production this year due to the union strike starting July 14. .

The company’s 250 prime contractors have had 150 billion won in lost profits. If the current strike continues until September, 10% of its contractors will go bankrupt.

Worsening labor-management relations-

The two parties decided on 2 years of wage freezes and 1.2 trillion won of investment for the next four years in exchange for withdrawing the restructuring plan on August 25 in its tentative collective agreement, but union members voted it out on the same day.

The management, which expected passage of the tentative agreement, immediately announced it would push forward restructuring and the union occupied its headquarters in defiance of the announcement.

On the top of that, labor-management negotiations were practically suspended because term of the current union leadership is set to end on September 1.

Election for the new leadership will be held on August 29, and if no one gets a majority vote, a run-off vote will be held on September 2.

The management argued the company needs restructuring, saying, “Ssangyong Motor Company’s productivity is a third of its competitors.”

The labor union said in response, “Ever since Shanghai Automotive Industry Corporation took over Ssangyong Motor Company, its bottom line has worsened and industrial espionage cases have emerged.”

Reconciliation and cooperation are needed-

The market share of Ssangyong Motor Company, which focuses on SUVs, has fallen from 9.8% in 2003 to 5.4% for the first half this year. It is the talk of the stock market that the Shanghai Automotive Industry Corporation might sell Ssangyong Motor Company right after acquiring its technologies.

But the management announced that resale is out of the question and it plans to launch six new models by 2010 if the current labor-management conflicts are resolved.

Korea Institute of Industry and Technology Information analyst Jo Cheol said, “At a time when future prospects are not rosy, the labor and management should join forces to revitalize the company. Otherwise, the company’s future will grow grimmer.”

mobidic@donga.com aryssong@donga.com