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A battle for jobs

We hope Korean candidates do not learn from Trump to use force to get things done.
Jan 23,2017
The United States, or the U.S. president to be precise, is undoubtedly quite mighty. It may be the peculiar case with the brash new tenant of the White House. Donald J. Trump has outright bullied multinational electronics, aircraft, defense and automobile companies with an ingenious weapon called the border tax. He tamed top car names GM, Ford, Fiat Chrysler, Toyota and Volkswagen to make them pledge multibillion-dollar investments and hiring plans. Hyundai Motor willfully promised a $3.1 billion investment in the United States over the next five years before its name was called out.

The Korean president, on the other hand, has been impeached for having invited and personally pleaded with top corporate heads for donations that come to millions of dollars. Trump as a president-elect merely sent out 140-character Twitter messages to get what he wanted from top CEOs of global carmakers. His unabashed and unorthodox yet instant solution to raise employment could go into the textbooks of not only economics and business-management students, but students of political science.

Yoon Jang-hyun, mayor of Gwangju, must have been stunned by Hyundai Motor’s investment plans in the U.S. He had been trying to court Kia Motors into an automobile and electric vehicle industrial complex he was creating on a 4.6 million square meters (1,003 acres) plot of land across Gwangju and southern Jeolla Province to bolster the carmaker’s annual output capacity from Korea to 1 million units from its current 620,000 units. But he may have to kiss that dream goodbye now that Hyundai Motor Group has decided to expand Hyundai Motor and its sister company Kia Motors in the United States.

“I am envious and frustrated,” he said. “Governments now have to compete to make jobs. We have been working for years to host an automobile cluster to help our regional economy. We cannot expect help from the central government. Trump’s way to beef up jobs cannot be deemed right, but still we envy his strong will.”

Kia Motors would have weighed up the gains and losses. Although Gwangju is its home base, Kia cannot attempt expansion without incentives to mitigate high wages, militant labor unions, foreign exchange risk and tariffs.

“This is why we improvised so-called jobs for Gwangju,” he said. “If we keep average wages at the new industrial complex at 40 million won ($34,013), which is about 70 percent of what Kia pays to workers of other factories in Korea, Kia would be able to save production cost. If the production lines are run as a separate entity, there won’t be controversy over fairness against other Kia factories. Gwangju and South Jeolla traditionally have good labor-management relations. I am sure the plan for jobs in Gwangju could work out.”

There had been similar successful foreign cases. In the 1990s, Kitakyushu city in Japan persuaded Toyota to build production lines for Lexus. Auto 5000 was set up inside the Volkswagen complex in Wolfsburg as a separate manufacturing vehicle as a lower-cost model to keep manufacturing jobs from going to other areas. Auto-making is a sector that generates jobs in various related industries. Trump has not targeted automakers just to deliver jobs for white factory workers in the Rust Belt, said Shin Jae-hyung, vice chair of the Gwangju Auto Valley Committee.

The relationship between Kia and Gwangju mayor Yoon goes back two decades. Yoon, a Gwangju-born ophtalmologist and civilian activist, led a civilian campaign to save Kia Motors when the carmaker that commanded 40 percent of the regional manufacturing output went bankrupt in 1998, following the year of financial crisis. The last factory to produce finished cars in Korea was the one Hyundai Motor built in Asan, South Chungcheong, in 1996. As a result, Korea has been outpaced by India in its output of automobiles to rank sixth worldwide.

The campaign pledges to increase jobs by presidential hopefuls are rhetorical. A presidential candidate that is among frontrunners in the polls pledges to provide jobs in the public sector through tax money. Decent jobs are critical in sustaining growth, and yet presidential hopefuls do not have any plan to stimulate private-sector jobs or labor reform. We hope Korean candidates do not learn from Trump to use force to get things done.

JoongAng Ilbo, Jan. 21, Page 26


*The author is an editorial writer of the JoongAng Ilbo.

Hong Seung-il