Renault Samsung to Continue Shortened Work Hours in January... Labor-Management Negotiations Resume Early This Month

[Asia Economy Reporter Kiho Sung] Renault Samsung Motors has achieved its long-awaited first European export of the XM3 (export name New Arkana). However, it still appears unable to escape production normalization issues and union risks. It has decided to implement reduced working hours again in January this year, and the 2020 wage and collective bargaining agreement (Wage and Labor Agreement) negotiations are the only ones among the five domestic automakers to extend beyond the year. Due to this, there are concerns that if labor-management conflicts intensify around late January and early February, when production must be ramped up to meet export volumes, a greater crisis could arise.

According to the automotive industry on the 3rd, Renault Samsung Motors' labor and management recently agreed in a production meeting to operate only the day shift until the second week of January and eliminate night shifts. The Renault Samsung Motors Busan plant operated shifts in November and December last year, with shutdowns on December 11th, 23rd, 24th, and 31st. Work schedules for the third and fourth weeks of January will be decided at a production meeting scheduled for the 14th.

Renault Samsung Motors is the only one among the five domestic automakers to face strike uncertainties entering the new year. Especially, the wage and labor agreement negotiations, which have been deadlocked since September last year, are considered the biggest risk for Renault Samsung, which has started XM3 exports. If the union goes on strike causing production disruptions, the company could suffer irreparable damage.

Renault Samsung Motors is putting its life on the XM3. Since 2019, difficulties have increased as production of the export Nissan Rogue has decreased. Until November last year, Renault Samsung Motors recorded 87,929 domestic sales and 19,222 exports, a 33.2% decrease compared to the same period the previous year. Domestic sales increased by 14.4%, but exports dropped by a staggering 77%.

Reduced working hours leading to volume shortages are a significant burden for Renault Samsung Motors. Unlike other automakers, Renault Samsung's production workers are salaried, so even if production volume decreases due to reduced workload, their pay does not significantly drop. This creates a vicious cycle where production decreases due to export declines, but labor costs remain the same. Ultimately, XM3's export performance is expected to be key to Renault Samsung Motors' normalization. For the Rogue, up to 100,000 units annually, accounting for 30% of Busan plant production, were exported.

The bigger problem is that the wage and labor agreement negotiations have not yet been finalized. Recently, Renault Samsung Motors sent an official letter to the union proposing to resume main negotiations in early January.

The union is tightening its grip on the struggle in line with the resumption of negotiations. A Renault Samsung Motors union official stated, "We have decided to hold strike authorization votes on four days: January 8th, 9th, 11th, and 12th." At the end of last year, the union applied for dispute mediation at the Central Labor Relations Commission and received a decision to suspend mediation. After the union members' approval vote, a strike could be launched.

The union has indicated that if the current situation continues, it may go on strike around February, when XM3 export volumes increase. On the other hand, Dominique Signora, CEO of Renault Samsung Motors, emphasized at a press conference held last year that "Maintaining good labor-management relations is key to securing export volumes."

Meanwhile, Renault Samsung Motors' labor and management have continued conflicts by extending wage and labor agreement negotiations beyond the year every year. The 2019 wage and labor agreement was finally concluded in April this year, eight months after the initial meeting in September 2019. The 2018 agreement was also finalized in June 2019, one year after the initial meeting in June 2018.

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