Renault Samsung Motors relations with its labour union deteriorated further this week after the company shut down its only car plant, located in the South Korean city of Busan, after a third consecutive day of strike action by its 1,900 union workers on Tuesday.
According to local reports, the union on Wednesday said members would continue their strike action indefinitely unless the company reverses its decision to close the plant.
Workers are unhappy with the latest wage proposals after nine rounds of negotiations. The union is demanding a KRW71,687 (US$64) increase in the monthly basic pay and an annual bonus of KRW7m (US$6,240) per worker while the latest company proposal is for a wage freeze and a bonus of KRW3m.
The automaker, 81%-owned by Renault, reported a 24% fall in global sales to 31,412 vehicles in the first four months of 2021, compared with 41,477 units in the same period of last year, reflecting mainly tougher competition from domestic rivals Hyundai and Kia.
The ongoing strike action will make it more difficult for Renault Samsung to secure further overseas orders from Renault for the XM3 SUV [aka Arkana] which replaced the Rogue SUV as the main export model after Nissan cancelled that contract last year.
Earlier this year, Renault warned workers it needed to ramp up production and cut manufacturing costs to stay afloat.
Renault Samsung announced an emergency cost cutting programme in January, including a voluntary early retirement package, management redundancies and white collar salary cuts to help reverse last year’s heavy financial losses.