Ssangyong’s union walked off the job last month in a dispute with the company’s new Chinese owners over proposed job cuts and a technology transfer that workers claim threatens their livelihood.
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Production at Ssangyong’s lone assembly plant, located about 45 miles south of Seoul in the port city of Pyeongtaek, came to a standstill when the walkout went full-time on 16 August, according to The Associated Press.
Shanghai Automotive Industry Corp took control of Ssangyong in late 2004, hoping to utilise its technology and experience manufacturing small, agile SUVs sold mostly in South Korea or exported to Europe.
Ssangyong’s 6,680-member strong union initially went on partial strike on 14 July to protest the elimination of about 1,000 jobs through early retirements and cuts, and SAIC’s plan to use Ssangyong technology and design to make the vehicles in China.
The strike so far has cost Ssangyong at least 6% of its annual production capacity of 220,000 vehicles as the strike stretches into its second month. Though Ssangyong’s sales rose 4.2% in 2005, they have slumped this year, declining 8.4% during the first seven months this year, the report said.
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By GlobalDataRows of partially finished Rexton and Actyon SUVs stand amid the downed assembly line, where striking workers pass the time smoking cigarettes, napping or speaking on cell phones.
Representatives of labour and management have held meetings in the factory’s headquarters building, where strikers wearing headbands inscribed in Korean with “Defense of Our Right to Live” sometimes gather in the lobby to shout slogans.
“The company hopes to see an end to the strike within this week and we are pursuing negotiations with this in mind,” Ssangyong spokesman Chung Mu-young told The Associated Press, adding that management is willing to compromise on job reductions.
The news agency noted that the strike came just as things appeared to be improving at South Korea’s smallest automaker – Ssangyong said earlier this month that it swung to a second-quarter net profit helped by its efforts to cut costs.
The company posted a net profit of 5.75bn won, or $6m, for the three months ended 30 June, recovering from a net loss of 67.36bn won a year earlier.
Those gains, however, are threatened by the walkout, Yong Dae-in, an analyst at Goodmorning Shinhan Securities in Seoul told AP. He expects the company to lose money again in the third quarter before perhaps breaking even in the fourth.
State-owned SAIC, a partner of General Motors and Volkswagen, is the latest foreign manufacturer to take control of a South Korean auto company, holding 51% of Ssangyong.
“We see Shanghai Automotive transferring technology,” union official Kim Young-geon told the news agency. “Ssangyong will degenerate into a subcontractor. That’s why this strike is getting longer.”
Ssangyong reportedly rejects the union’s claim that it is giving away technology to SAIC. Company spokesman Chung said that SAIC paid Ssangyong $26m in a licensing fee.
Earlier this year, Ssangyong said it would spend $2bn over five years to boost annual output to 340,000 vehicles from the current 220,000. Workers, however, told The Associated Press they don’t trust the company to keep its word.
AP noted that South Korea’s auto industry is beset by annual labour difficulties, where workers often strike to press demands during annual wage negotiations.
Industry officials reportedly are concerned the strike at Ssangyong sends the wrong message about South Korea.
“We are very worried about it because the current difficulty (affects) the credibility of the Korean auto industry,” Honey Ryun, an official at the Korea Automobile Manufacturers Association, told The Associated Press.
