Strike action is spreading across South Korea’s shipbuilding and steel industries, key pillars of the country’s manufacturing sector. Despite a surge in orders that has pushed operating rates above 100%, production disruption risks are mounting as labor and management remain divided over wage and collective bargaining agreements.
According to industry sources on Sept. 10, the union at HD Hyundai Heavy Industries is carrying out rotating strikes by affiliated units and has announced a four-hour partial strike involving all union members on Sept. 15. Management presented a second proposal that included a 105,000 won ($78.49) increase in base pay and incentive payments, but the union rejected it. The union is stepping up its action, demanding a 149,600 won increase in base pay and profit-sharing equivalent to at least 30% of operating profit.
The union at Hanwha Ocean has also continued partial and full-scale strikes since Aug. 31. On Sept. 9, about 4,700 union members staged an eight-hour full strike, temporarily halting operations of some cranes and transporters at the Geoje shipyard. The union says management’s proposal to raise base pay by 95,000 won falls short of its expectations. The Samsung Heavy Industries Labor Council has also stepped-up pressure over delays in the wage proposal, staging rallies in Seoul near Samsung Electronics’ Seocho office building and the residence of Chairman Lee Jae-yong.
The steel industry is facing a similar situation. The POSCO union, affiliated with the Federation of Korean Trade Unions, began a 48-hour partial strike on Sept. 9. It is the first actual strike since the company was founded in 1968. Operations at the pickling plant at Gwangyang Steelworks and the electrical steel sheet plant at Pohang Steelworks are expected to be suspended, although management said the impact on overall production is likely to be limited because of the low participation rate. The union is demanding a 7.1% increase in base pay, while management has offered 2%, leaving the two sides far apart.
The business community warns that prolonged strikes could weaken the competitiveness of South Korea’s manufacturing sector. At HD Hyundai Heavy Industries, the merchant ship division has already exceeded 110% of its annual order target, while its operating rate has reached 100.7%. If the strikes continue, construction schedules could be disrupted, potentially forcing the company to pay compensation to shipowners and damaging its reputation with customers.
POSCO, which is already facing weak earnings, is also under pressure. Its operating profit in the first half of this year plunged 43% from the same period a year earlier, raising concerns that production disruptions caused by the strike could further hurt its performance. An industry official stressed that delivery schedules and customer trust are critical sources of competitiveness and urged labor and management to reach an agreement through dialogue.
Source: Business Korea
