'Worst Scenario' Raised... Hyundai Heavy Industries Faces Strike Threat in May

[Image source=Yonhap News]

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[Asia Economy Reporter Oh Hyung-gil] As the labor-management conflict at Hyundai Heavy Industries drags on, the tension for a 'May strike' is intensifying. Recently, with orders continuing since last year, including container ships worth around 1 trillion won, the company has succeeded in securing work for 2 to 3 years, but it seems insufficient to prevent a strike.

According to the industry on the 25th, the Hyundai Heavy Industries branch of the Korean Metal Workers' Union plans to hold a Central Dispute Countermeasures Committee meeting on the day to discuss plans for struggles including a strike.

The labor and management began wage negotiations for 2021 in August last year and only reached a tentative agreement in March. The agreement included a basic salary increase of 73,000 won (including seniority increments), a performance bonus of 148% of the agreed wage, and a 2.5 million won encouragement payment. In particular, the union averted a strike crisis by reaching the agreement dramatically the day before the union announced a full strike. However, the tentative agreement was rejected by union members in a vote (67%), causing further difficulties.

The union requested the resumption of negotiations on the 18th, but the company is reportedly seeking time to prepare a new agreement. A Hyundai Heavy Industries official said, "After the rejection of the agreement, internal review requires time."

In response, the union stated through a newsletter on the 22nd, "The company missed the opportunity to conclude negotiations without using the right to collective action," and "A strike against a company that does not respond to repeated calls to resume negotiations is justified," expressing their determination to strike.

[Image source=Yonhap News]

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The union secured the right to dispute with a 90.8% approval rate in a member vote conducted in November last year, and is in a position to initiate a strike at any time. Last year, the union also carried out strikes due to failure to reach agreements on wage and working conditions for 2019 and 2020, making a second consecutive year of potential strikes visible.

In a rapidly changing business environment with soaring raw material prices, Hyundai Heavy Industries is also burdened with the impact of a strike. On the 20th, Hyundai Heavy Industries Group held an emergency meeting of presidents to discuss countermeasures in response to the global business environment, including the Shanghai lockdown in China and the Russia-Ukraine situation.

The management's order to prepare countermeasures considering the 'worst-case scenario' reflects the urgency of the current situation, according to the company.

Negotiations with the steel industry over the price of shipbuilding steel plates, which directly affect performance, are prolonged. Steel plates account for 20% of the shipbuilding cost, so the unit price greatly influences profitability. Last year, the company suffered large-scale losses due to rising steel plate prices.

On-site, labor shortages are becoming a reality. As the recently ordered ships begin full-scale construction in the second half of this year, demand for production personnel is expected to increase significantly, with warnings that about 9,500 production workers may be lacking by September.

A Hyundai Heavy Industries official said, "Despite last year's deficit, we succeeded in preparing a groundbreaking agreement reflecting employees' demands, but its eventual rejection has deepened our concerns."

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