Jeong Manki "Automotive Industry Faces Crisis Due to Semiconductor Shortage and Labor Disputes... Government Role Needed" (Comprehensive)

Minister of Trade, Industry and Energy Moon Seung-wook and Chung Man-ki, Chairman of the Korea Automobile Manufacturers Association, are attending the '18th Automobile Day Ceremony' held on the morning of the 12th at the Korea Automobile Manufacturers Association Automobile Hall located in Seocho-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Chung Man-ki, chairman of the Korea Automobile Manufacturers Association, emphasized the need for government policy roles, stating that "the domestic complete vehicle industry is facing a crisis after COVID-19 due to semiconductor and parts shortages as well as labor-management conflicts."

At the '18th Automobile Day' ceremony held on the 12th at the Automobile Hall of the Automobile Manufacturers Association in Seocho-gu, Seoul, Chairman Chung said, "At the beginning of last year, our automobile industry was in great crisis due to COVID-19, but thanks to the government's effective quarantine and domestic demand stimulation measures, domestic demand increased by 6%, the only increase in the world," and evaluated, "Complete vehicle manufacturers, the government, and local governments contributed hundreds of millions of won or more to establish a special win-win guarantee program, which helped maintain the industrial ecosystem intact."

However, he pointed out, "This year, due to semiconductor demand and supply shortages, complete vehicle manufacturers are unable to secure sufficient quantities," and added, "Like during the COVID-19 crisis last year, effective cooperation among the government, companies, and financial institutions is necessary."

Chairman Chung also mentioned the crisis of three foreign-affiliated complete vehicle companies?Korea GM, Renault Samsung Motors, and SsangYong Motor?explaining, "The root of the problem lies in labor-management conflicts and low efficiency with high costs. Above all, the biggest challenge is to win the competition to secure quantities among each company's global production bases."

He continued, "Rankings are deteriorating in all evaluations such as quality, cost, time, and productivity," emphasizing, "In a situation where seniority-based pay is maintained instead of performance-based pay, annualized negotiation cycles are in place, frequent strikes occur, and labor rigidity is emerging, proactive cooperative practices must be established."

Furthermore, he suggested, "Recently, we are facing other difficulties, so the government's role is important," and proposed, "Efforts for international cooperation to secure vehicle semiconductors, measures to resolve liquidity difficulties, and institutional improvements to enhance production flexibility such as expanding flexible working hours should be actively considered."

Minister Moon Seung-wook of the Ministry of Trade, Industry and Energy attended the ceremony and responded by pledging to strengthen policy support to secure the competitiveness of the domestic automobile industry.

In his congratulatory speech, Minister Moon evaluated, "Last year, our automobile industry achieved qualitative advancement, with the export share of eco-friendly vehicles expanding from 10.8% to 14.7%, and the average export price per vehicle increasing from $16,146 to $17,901, resulting in increased exports of high value-added vehicles."

He added, "Going forward, we must accelerate digital and green transitions," and said, "We will strengthen policy support for the rapid transition to future vehicles, which is a timely task to achieve carbon neutrality by 2050 and secure the competitiveness of the automobile industry."

Detailed measures include ▲ support for the future vehicle structural transition of the automobile industry ▲ establishment of a 'Comprehensive Support Plan for Parts Companies' Future Vehicle Transition' in the first half of the year ▲ support for maintaining and expanding jobs in the automobile industry during the future vehicle transition process ▲ and expanded communication with industrial sites.

Meanwhile, Huh Jae-geon, chairman of Daewon Industry, received the Silver Tower Order of Industrial Service Merit. Chairman Huh was recognized for his contribution to securing global technological competitiveness in the seat sector for passenger cars and recreational vehicles (RVs). The Bronze Tower Order of Industrial Service Merit was awarded to Kim Jin-hong, managing director of GM Technical Center Korea.

The Industrial Service Merit was awarded to Kim Yong-chil, CEO of Jin-Hap, for developing and commercializing new technologies such as anti-release brake technology for pickup trucks and pioneering overseas markets, and to Hong Young-jin, director of Renault Samsung Motors, for leading the timely supply of more than 20,000 units of the new XM3 model, securing about 50% of the total production volume for export in 2021.

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