'Survival Plan' Sees Renault Samsung Union Strike Vote Passed

Renault Samsung "Busan Plant Must Strengthen Price Competitiveness to Secure New Car Allocations"

[Asia Economy Reporter Yu Je-hoon] The Renault Samsung Motors labor union has finally pulled out the strike card. This comes amid Renault Samsung's implementation of a ‘survival plan’ and intensive profitability improvement measures to survive after recording the worst production and sales performance last year. Industry insiders are concerned that this strike card could have a negative impact, as Renault Samsung's survival depends on securing price competitiveness to allocate new car volumes.

The Renault Samsung union announced on the 3rd that the strike was approved with a 57.5% (1,245 members) approval rate in a strike vote conducted on the 1st and 2nd among 2,165 union members. The vote involved the representative union and the metal branch, while 154 members belonging to the minority 3rd union (Saemirae) and 4th union (Sales Service) did not participate.

The Renault Samsung union had already obtained the right to strike last October when the Central Labor Relations Commission decided to suspend dispute mediation. With this vote securing a majority of union members' approval, the union has legally acquired the right to strike. This is about one year after the partial strike in 2019-2020.

The reason the Renault Samsung union pulled out the strike card is due to the stalled 2020 wage and collective bargaining negotiations. Currently, Renault Samsung is the only domestic automaker that has not concluded wage and collective bargaining agreements. The union is demanding a basic wage increase of 70,000 KRW, but the fourth main negotiation reportedly saw no significant progress.

In this situation, the labor-management conflict has intensified as Renault Samsung, which recorded its worst performance last year, launched a survival plan to improve profitability. Recently, Renault Samsung decided to sell the small-scale maintenance facility, Ilsan Technostation (TS), and conduct voluntary retirement for all employees for the first time in about eight years.

The problem lies in Renault Samsung's challenging management environment. Since Nissan Rogue production stopped in March last year, Renault Samsung has been suffering from a lack of work. Consequently, total production last year was 112,171 units, a 31.5% decrease compared to the previous year. This is the lowest level in 16 years since 2004. The export performance without the Nissan Rogue is even more severe. Last year, Renault Samsung's export volume was 20,227 units, a drastic 77.7% decrease.

To survive, Renault Samsung must secure production volume from headquarters centered on the XM3, but even this is difficult. The Renault Group, also facing management difficulties, announced the ‘Renalution’ plan to improve operating profit margin to 3% by 2023 through various cost-cutting and restructuring measures. In particular, Korea, along with Latin America and India, was identified as a region where profitability must be further improved in this strategy.

Renault Samsung appeals that proving the productivity of the Busan plant is crucial to securing production volume. Christopher Loutte, Renault Samsung’s Chief Financial Officer (CEO), recently stated at a forum, "Producing the same vehicle at the Busan plant is $1,100 (about 1.22 million KRW) more expensive than at the Valladolid plant in Spain," adding, "The Busan plant must further strengthen price competitiveness to secure production volume from headquarters."

In this situation, the union leadership is determined to decide on whether to strike after observing the progress of the fifth main negotiation scheduled for the 4th. However, cautious opinions are growing within the union, so it remains to be seen whether the strike will proceed. The 57.5% approval rate in this vote, the lowest ever, supports this. It is even lower than the approximately 60% approval rate during the membership vote for the nationwide metalworkers union under the Korean Confederation of Trade Unions, which was rejected last year.

A union official said, "We will hold a strike countermeasure committee next week after observing future negotiations to decide the level and policy of the struggle."

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