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Automakers need to catch up

Oct 05,2018
Governments around the world are removing regulations and sponsoring research and development to breed technologies for future industries like autonomous and clean vehicles. Global automakers are moving quickly towards the future while Korean makers make baby steps. In Sweden, self-driving vehicles roam the streets to pick up trash and keep neighborhoods clean. Driverless electric buses are being tested out on the roads in Sweden. Convoys of 25-ton Volvo trucks can drive on Swedish highways because the government has paved the way.

Korea’s autonomous driving technology is at the bottom in world rankings. In a study by Navigant Research, Hyundai Motor Group ranked 15th among 19 automakers in automated driving technology. They slid five places this year, from 10th in 2017. Tough regulations have hampered testing for further advances. Korean carmakers’ M&A value last year made up just 10 percent of Chinese and U.S. enterprises. R&D also has been slow.

German, Spanish, and Japanese automakers have sharply improved productivity through labor-management consensus. The BMW electric vehicle factory in Leipzig, Germany, spanning over a space of 10 soccer fields, only has 50 human workers. Most assembly work is done by robots while the human workers oversee parts inventory. It was workers at Spanish carmaker SEAT that asked for robots to hone productivity. The Spanish government kept production lines from moving to Eastern Europe with cheaper labor costs by enabling flexibility in layoffs. Toyota is also enjoying another peak thanks to automated production.

Korean automaking power is sinking amid a murky future. Output has been reduced to levels of 10 years ago. Operating margins have sharply deteriorated for both finished car and parts makers. Korean car factories have become infamous for high labor costs and low productivity. More and more parts makers are going insolvent. Even one of the first-tier suppliers of Hyundai Motor and Kia Motors has applied for a debt workout program. The Korean automaking industry could collapse if the supply chain shakes.

The automaking sector — employing three times more than shipbuilders and responsible for 11 percent of exports — is a pillar of the Korean economy. Alarm bells are ringing loudly. The government, management, and union must come up with a solution fast before the industry goes down.

JoongAng Ilbo, Oct. 4, Page 30