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Workers Walk Out in Korean Shipyards

Monday, September 14, 2015

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South Korea’s troubled shipyards are dealing with yet another blow: striking workers.

After reporting record losses in the second quarter—a combined $4.8 trillion won (US $4.1 billion)—Hyundai Heavy Industries (HHI), Daewoo Shipbuilding & Marine Engineering Co. (DSME) and Samsung Heavy Industries (SHI) pointed the finger at a poorly timed move into offshore markets.

Now, workers at three of the country’s nine shipbuilding companies are pointing the blame at them with calls of poor management, lack of job security and flat salaries.

Workers Walk Out

The three companies currently affected by the worker strikes are HHI, DMSE and Samho Heavy Industries. According to Korea JoongAng Daily, a partial strike began Sept. 9 with 28,000 workers walking off the job for four hours each day and planning to continue to do so for one week.

Photos: © / junak

Workers at three of South Korea's nine shipbuilding companies are striking because of of poor management, lack of job security and flat salaries; more unions are expected to join the walkout.

This follows earlier walkout activity at HHI on Aug. 26 and Sept. 4, during which production was halted at its Ulstan yard, IHS Maritime 360 reported. It also indicated that staff in HHI’s business departments is planning a partial strike from Sept. 10 through Sept. 16.

HHI has the most active union membership with 16,000 workers involved, according to the Hellenic Shipping News.

Meanwhile, other shipyards, including SHI and Hyundai Mipo Dockyard, are in negotiations regarding next year’s wages and voting on whether to join the strike.

Hanjin Heavy Industries workers are not participating in the strike activity.

In its pre-strike report, the Shipping News indicated that STX Offshore & Shipbuilding had already negotiated a deal on wage increases and also would not participate in the walkouts.

Union representatives told JoongAng that if management doesn’t respond in a timely manner, a longer strike will be instituted Thursday (Sept. 17).

The unions have voiced concern that management appears to rely on layoffs and its own recovery plan rather than communicating with the union.

Workers at DSME are taking it another step, threatening a hunger strike as part of a plea for the company’s creditor, Korea Development Bank, to come to the rescue with additional funds for the company.

The shipyards are not the only South Korean industry entangled in strike talks; Hyundai Motor union workers are similarly displeased with pay and benefits offered by management.

They also vote Thursday whether the 48,000 union members will strike, The Korea Herald reported. This would be the fourth year in a row the autoworkers have called a strike.

Call for Change

According to JoongAng, the union is displeased that management appears to rely on layoffs and its own recovery plan rather than communicating with the union.

A wage freeze was enacted after the Q2 losses were reported and the companies are asking the workers to recognize the companies’ financial situation. However, the Coalition of Shipbuilders’ Labor Unions is asking management to raise the workers’ base salaries by approximately 120,000 won ($100) a month, the Shipping News reported.

The Maritime Executive reported that the union feels the companies are punishing the workforce for the financial losses rather than holding management responsible.

However, the news site indicates that cuts have occurred in the upper ranks as well. Thirteen DSME executives resigned in response to the Q2 losses, and another 1,300 senior management positions are to be released before year’s end. Similarly, about 30 percent of its senior staff has been dismissed by HHI since 2014, and 25 executives were replaced in July.

Still, Jeong Byung-mo, head of HHI’s labor union, sees room for negotiation. He told the Shipping News that the unions are aware that their protests are viewed negatively in light of the industry hardships. However, the workers feel those hardships should be offset by the executives who still bring in the high salaries.  

“What we are asking from the company is to use the money it earned from 2003 to 2009, when the industry was booming, the money the company said in the past it would use if it fell into trouble in the future,” Jeong said.

Management is being asked to raise the workers’ base salaries by approximately 120,000 won ($100) a month.

“The company and its two affiliates in the shipbuilding business have 18 trillion won in reserves total, but they keep saying we should tighten our belts.”

The Big Picture

A recent editorial in the Herald criticizes the striking workers for selfishness, claiming they are “well paid and protected” and so their actions show a “total disregard for the worst slump in global shipbuilding business in years.”

Head researcher in industry analysis for the Hyundai Research Institute Joo Won told JoongAng that the strikes threaten the other industry suppliers, the domestic economy and the chance for “positive structural change.”

However, he said, “The shipbuilders are facing an acute crisis, and industry insiders are discussing industry-wide restructuring.

“In fact, there’s not a lot the unions can get from strikes in this industry because the companies themselves are on the verge of extinction,” he added.


Tagged categories: Asia Pacific; Business operations; Daewoo Shipbuilding & Marine Engineering Co.; EMEA (Europe, Middle East and Africa); Hyundai Heavy Industries Co.; Latin America; North America; Program/Project Management; Samsung Heavy Industries Co.; Shipyards; Unions; Workers

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