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An auto industry in crisis

Aug 14,2017
The first Korean car was made in 1955 out of oil drum cans found in the trash and parts from American military Jeeps. Koreans turned out their first homegrown car, the Pony, in 1975. Through the concerted efforts of workers, engineers and corporate managers, Korea became an automaking powerhouse.

Its sixth rank in global scale, though, is now in jeopardy.

Workers at Hyundai Motor laid down their tools for two hours in turns day and night last week. The factory site has been interrupted by strikes for a sixth consecutive summer. Unions at four other automakers are preparing a strike or are mired in labor disputes.

The union at GM Korea, which saw up to 2 trillion won ($1.7 billion) in losses through last year, also voted in favor of a walkout. When it acquired Daewoo Motor in 2002, GM pledged to maintain management rights for 15 years, but it has been streamlining overseas operations since 2013. Starting in October, it is free to sell its stake and pull out of Korea.

Another risk is a court ruling due later this month on a lawsuit filed by Kia Motors employees demanding what it claims to be overdue bonuses and overtime pay. If the management loses, Kia will have to pay out some 3 trillion won. The industry believes such a one-time loss could put the company in the red and shake its bigger affiliate Hyundai Motor and all their partner suppliers and producers.

The Korea Automobile Manufacturers Association, which represents the five big automakers, issued a statement threatening to take their manufacturing facilities out of the country in search of a more business-friendly environment.

But even without internal problems, the Korean auto industry faces fierce competition in the global market. It cannot survive if it does not meet the needs of each market in a timely fashion.

Labor costs and the relationship between unions and management can determine competitiveness. The union must rethink its demand for back pay.

The auto industry cannot be saved by the president or the government. It must find a way out by itself and with the help of its workers.

JoongAng Ilbo, Aug. 12, Page 26