Renault Samsung Struggles with Strike Aftermath, Faces Production Cliff Reality

Renault Samsung January Exports Down 77% Year-on-Year
Nissan Rogue Shipment Limited to 1,230 Units
Renault Samsung Labor and Management Hold Intensive Negotiations from 4th to 7th
Quick Negotiation Conclusion Needed to Secure Follow-up Export Volume

[Asia Economy Reporter Woo Su-yeon] The production cliff at Renault Samsung Motors, which suffered from strikes over last year's wage and collective bargaining negotiations, has become a reality.

The January sales report, received for the first time since the labor union resumed strikes at the end of last year, showed sales halved compared to the previous year, clearly reflecting the impact of the strike. The intensive wage and collective bargaining negotiations between Renault Samsung labor and management scheduled from the 4th are expected to be the last line for normalizing management.

According to the automotive industry, Renault Samsung sold 6,233 units globally in January this year, a 54.5% decrease compared to the previous year. Domestic sales dropped 16.8% to 4,303 units, and exports plunged 77.3% to 1,930 units. The consignment volume of the Nissan Rogue, Renault Samsung's main export model, was limited to 1,230 units shipped, an 83% decrease from the previous year.

Renault Samsung's January sales falling below 6,500 units is the first time in seven years since January 2013 (5,709 units), right after a large-scale restructuring. In 2012, Renault Samsung suffered management difficulties due to poor sales and carried out a large-scale voluntary retirement involving about 800 employees. At that time, the labor union empathized with the company's situation and made a magnanimous decision to accept wage freezes for two consecutive years. Accordingly, in 2013, Renault headquarters allocated an annual consignment volume of up to 80,000 Nissan Rogue units to the Busan plant as part of the Renault-Nissan Alliance.

At that time, the Busan plant was able to secure orders due to its competitive labor costs, stable supply, and excellent technical skills. With the addition of Nissan Rogue export volumes, Renault Samsung's monthly exports maintained over 10,000 units for a while since September 2014.

On the other hand, Renault Samsung's exports have rarely exceeded 10,000 units since the second half of 2018. This is because intermittent strikes continued for about a year from the second half of 2018 to the first half of 2019 due to labor-management conflicts over the 2018 wage and collective bargaining negotiations.

As stable supply became difficult, Nissan reduced the consignment volume of the Rogue, which once reached 100,000 units annually, to about 60,000 units per year, causing Renault Samsung's exports to decline rapidly. Eventually, in January this year, exports shrank to 1,930 units as strikes resumed again due to the 2019 wage and collective bargaining negotiations.

This figure represents a 77% decrease compared to the previous year and is the lowest in seven years since January 2013. Even during the long-term strikes over the past year, exports never fell below 2,000 units. However, this time, the production cliff has become more pronounced due to the existing strike stance combined with the company's workplace closure measures.

The Renault Samsung labor union has continued partial strikes for about a month since December 20. As the participation rate of union members fell below 30% due to strike fatigue, the union revised its strategy to maximize production damage by enforcing guerrilla-style designated strikes. In response, the management also took a strong measure of partial workplace closure, causing the Busan plant's operating rate to drop sharply.

Renault Samsung labor and management will begin intensive negotiations on the 2019 wage and collective bargaining from today until the 7th. Since Renault Samsung's January sales fell to half of last year's level and the consignment contract for the Nissan Rogue expires in March, both sides are expected to approach the negotiations with a mindset that this is the last chance. A quick conclusion is necessary to secure the successor model of the Rogue and avoid the imminent production cliff.

Renault Samsung's Busan plant has secured domestic production of the new model 'XM3' but is competing with the Valladolid plant in Spain for European export orders. On the 29th of last month, Jos? Vicente de los Mozos, Renault's Vice Chairman in charge of manufacturing, who visited the Busan plant, stated, "To secure European export volumes, Renault Samsung must first resolve labor-management conflicts," and added, "If labor and management join hands, the group will not hesitate to provide support."

This content was produced with the assistance of AI translation services.