Hyundai Heavy CEO clears first hurdle

Korea Inc. is no stranger to violent clashes between unions and companies.

Hyundai Heavy Industries (HHI) saw some of the nation’s most violent clashes in the 1980s and 1990s before achieving lasting peace on its shipyard.

That peace was on the brink of collapse last year at the height of an industrial slump before HHI CEO Kwon Oh-gap and the union reached a tentative agreement to avoid a strike Wednesday. Of course, the agreement was tentative, so a strike can’t be ruled out completely.

Kwon was a respected figure in HHI before being sent to head Hyundai Oilbank, a subsidiary of the shipbuilder.

He was called back to lead a HHI in crisis last September and immediately set about fixing the firm.

Together with his executives, he has appeared at the front gate of the Ulsan shipyard since Sept. 23 to persuade workers to end strikes.

In addition, he decided to stop receiving his salary until HHI’s health improves.

Kwon has let 81 executives (30 percent) of his top officials go, and called on workers to take steep wage cuts, according to an HHI spokesman.

Hyundai Heavy recorded a whopping net loss of 1.46 trillion won (about $1.3 billion) in the January-September period largely due to lower contract prices to build ships with higher costs. It posted a net profit of 374 billion won in the same period last year.

Kwon’s ordeal is not over yet by any means, and not just because of the tentative nature of the agreement with the union, but because of the ongoing slump that has hit the industry, alongside the continued growth of Chinese shipbuilders.

“Hyundai Heavy workers made some concessions in the seven-and-a-half-month wage negotiations (since May) with the company to help it tackle declining orders and growing uncertainties this year,” Kim Hyung-gyun, a spokesman for the union, said Thursday.

The tentative deal requires approval from more than half the company’s 18,000-member union in a vote scheduled for Jan. 7. The unionized workers have held strikes four times since late October in the Ulsan shipyard to demand increases in their basic pay and bonuses.

Under the tentative agreement, the workers agreed to an increase of 37,000 won in basic monthly salary and some stock as well as 2 million won in bonuses.

Hyundai Heavy was established in 1973 and its labor union came into existence in 1987. Unionized workers staged strikes during the 1987-1996 period seeking higher wages and better working conditions.

Afterwards, however, the shipbuilder managed to sign a wage contract with its workers meaning there were no strikes in the past 18 years since 1996. The recent strikes by Hyundai Heavy workers have brought criticism that their demands went too far, given the fact the shipbuilding business is still at rock bottom.

In his new-year message, Hyundai Heavy Chairman Choi Kil-seon said Wednesday that the company suffered its “worst-ever difficulty” last year since it was established four decades ago as low-priced contracts led to huge losses that hurt the financial health of the company.
Source: Korea Times