[The Editors' Verdict] Why Korean Manufacturers Hesitate to Invest in the United States

The CEO of a domestic venture company that manufactures satellite-related equipment recently decided to build a factory in the United States. The company has already signed a contract. This company sells its products to major US big tech firms, and was asked to establish a local factory to ensure a stable supply chain. In particular, after the martial law crisis erupted in December of last year, demands for local factory construction intensified. Despite persistent requests, the company only decided to make a new facility investment after more than six months of deliberation. The CEO stated, "It was a decision made with our customers and the market in mind."

The lengthy deliberation over establishing a local factory was not only due to concerns about investment risks. The CEO explained that they would need to hire local workers to operate the factory, but there were doubts not only about the burden of labor costs, but also about whether these workers could perform their work properly. He said, "Labor costs are at least twice as high as in Korea, and considering the situation in the United States, where the history of manufacturing has almost been severed, it was difficult to guarantee productivity. That was the biggest concern."

The income gap between South Korea and the United States is clear. According to the World Bank, the per capita gross national income (GNI) in the United States was $83,600 last year, more than double South Korea's $36,000. As of last month, the average annual wage for manufacturing workers in the United States was $73,760 (about 100 million won). In contrast, according to the classification by the National Statistical Portal, manufacturing workers in South Korea earn just over 40 million won.

On the other hand, the skill level of workers is lower. The Netflix documentary "American Factory," which deals with internal conflicts at a Chinese company operating in the United States, offers a harsh assessment of local workers. Chinese management pointed out the low productivity of the employees they hired. According to the US Bureau of Labor Statistics (BLS), productivity in the automotive sector, a representative manufacturing industry, averaged an annual growth of 4.1% from 1987 to 2007, but fell to -2.6% from 2019 to 2024. Hourly production intensity also shrank from 3.2% to 1.0% over the same period. Since 1970, as capital began to move freely across borders, manufacturing gradually left the United States, leading to the collapse of its industrial base. According to statistics from the Federal Reserve Bank of St. Louis, the number of manufacturing jobs in the United States fell from 19.55 million in June 1979 to 11.43 million in March 2010. Over 8 million manufacturing jobs disappeared in the United States in 31 years.

Until now, Korean companies that decided to invest in facilities in the United States have not openly expressed concerns about securing local labor. They saw it as an inevitable part of avoiding tariff barriers while targeting the world's largest market. In the early stages of factory construction, they believed it was acceptable to send Korean staff to ensure stable operations before hiring American workers.

Recently, when US authorities raided factories under construction by LG Energy Solution and Hyundai Motor and raised issues regarding illegal dispatch, Korean companies reacted strongly. Considering that visa issuance for Korean employees has also been difficult, it is essentially no different from demanding that companies hire less skilled workers from the very beginning of operations. Since this is a demand that is difficult for companies to accept, dissatisfaction has inevitably surfaced.

Since the launch of the Trump administration, the US-China conflict has intensified, making the new Cold War the new normal. Edward Fishman, a former US State Department official, wrote in his recent book "Choke Point" that the current situation mirrors the East-West standoff of the Cold War era, but added, "During the Trump era, the world should be seen as split into at least three blocs, including Europe, not just East and West." This refers to the ambiguous situation where even allies are being treated as adversaries. In the name of creating jobs for Americans, even Asian allies are being pushed into a gray zone.

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