SOUTH KOREA: Smooth labour relations benefit Renault affiliate

By just-auto.com editorial team | 26 October 2009

Renault Samsung Motors is the country's second smallest automaker, majority owned by Renault, but, during the first nine months of this year, sold 91,222 vehicles to claim 9.4% of the local market, the third largest share after Hyundai and affiliate Kia.

At the end of last year, the company was the country's second smallest carmaker in terms of domestic sales with a market share of 8.8%, the Korea Herald said.

Although the company remains the second smallest carmaker in terms of exports, it has been gradually increasing export volume.

In 2000, the company exported only 192 units but the tally had risen to 3,610 units by 2005 and last year Renault Samsung shipped over 95,000 vehicles abroad.

"The increasing exports have played a significant role in improving the company's profitability and growth," a Renault Samsung official told the paper. He added that as the company's products are marketed overseas under the Renault and Nissan brands, the company is able to use their extensive sales and service networks, aiding its aim of bringing about balanced growth for domestic and export growth.

"In addition, by shipping vehicles to more than 60 countries including Russia, South American and Middle Eastern nations, we are consolidating our position as the Renault-Nissan Alliance's hub in the region."

The company's financial link with the Renault-Nissan alliance is designed so that payments for vehicles sold to either partner are made on the month following delivery enabling the company to secure sufficient liquidity.

Renault Samsung's Busan plant is equipped with flexible assembly lines that can produce up to eight different models.

"The flexibility of the assembly line allows us to alter output of different models according to changes in demand on monthly or quarterly basis," a Renault Samsung official said.

The most significant difference that sets Renault Samsung apart from its local competitors is the unique arrangements it has with its employees, the Korea Herald noted.

Local carmakers have long been plagued by bumpy labour-management relations that have made strikes almost an annual event.

Renault Samsung, however, is unique in that it has maintained smooth relations with its workers and has yet to experience clashes since the company's launch in 2000.

The clean record, unprecedented in Korea, is attributable in part to the unusual arrangement the company has in place.

Instead of a labour union, Renault Samsung employees are represented by the Employee Representative Organisation. While the ERO serves all the functions of a union, such as speaking on behalf of the workers in wages negotiations and in other major issues, it has been essential to establishing a peaceful and cooperative relationship between the management and workers.

The efforts made by the company and the ERO have received official recognition. In 2007, the company received the prime minister's award for labour-management relations.

"In addition to the flexible production system, the company's operational efficiency owes much to our labour-management relations," a Renault Samsung official told the paper.

"Because we have smooth relations between the two, we have been able to avoid strikes and delays in making decisions that affect the operations of the company."