hankyoreh

May 22.

Ssangyong Motor is racing toward a crossroads at the edge of a cliff. While a sheer drop lies before it, “liquidation” is on one side, and the road to “survival through restructuring” is on the other.

As interested parties, creditors, met to determine Ssangyong Motor’s fate on Friday, the car maker’s union launched an indefinite strike, using containers to seal off the doors to the factory in Pyeongtaek located in Gyeonggi Province. While more than 3,000 members gathered instant noodles and water, and prepared for a long, drawn-out strike, fliers from the management advising workers to resign scattered through the air, reading, “We will do our best to consider those who resign voluntarily for priority rehiring at a later date.”

Differing opinions from labor and management on how to survive

As of now, both the labor and the management acknowledge that the company is failing. But the solutions they offer for its survival are diametrically opposed. The management’s recovery plan would involve first lightening the company’s load with restructuring, laying off 2,646 workers or 36 percent of the entire workforce, and then searching for a survival plan afterwards, whether by a sell-off or self-rescue. Their calculations have the company saving 232 billion Won per year in personnel expenses through the layoffs, which would allow them to balance their revenues and expenditures.

In contrast, the union is both calling on the management to withdraw their plans for layoffs that incur too great a social cost and claiming that the company can survive through a bold job sharing program. Currently, Ssangyong Motor has an 8 hour shift system, day and night shifts of eight hours each, and the union is saying that there would be no need for layoffs if this is reduced to a 5 hour shift system. Union members are promising to jointly provide 100 billion Won in collateral and contribute 1.2 billion Won for a labor-management security fund.

“If we switch to a 5 hour shift system, it would result in a reduction of 30 percent or more in wages, and if you add in the 100 billion Won provided as collateral, we can ensure funding equal to the amount saved in personnel costs by the layoffs announced by the company,” explained a union official.

However, neither the management’s plan nor the union’s guarantees independent survival. Both assume financial support from outside. The management is demanding 100 billion Won in layoff expenses and 150 billion Won in R&D expenses for new models, for a total of 250 billion Won, while the union’s figure is in the 800 billion Won range.

Finding a model for Ssangyong Motor

Experts are saying that neither of these methods represents the best path to Ssangyong’s recovery. First, the management’s plan is problematic in that it offers little sign of a long-term vision beyond an immediate restructuring.

“Just as we saw the German government agree to provide a relief loan to Opel, no country is going to abandon a mainstay industry like the automotive industry, and Ssangyong Motor must also be reborn as a new company one way or another,” said Jeong Myeong-gi, a business administration professor at Hannam University. “However, the recovery plan the management is currently presenting is myopic and does not take into account the social costs of layoffs and the shock to the regional economy,” Jeong added.

Meanwhile, experts say the labor side’s plan lacks feasibility. “The union’s proposal does not take into account the continuous burden of costs arising from the maintenance of the excessive workforce in light of sales figures,” said Ahn Soo-woong, a research head at LIG Investment and Securities.

Both the labor and the management have found themselves in a standoff at the edge of a cliff, with neither side giving an inch. The management is showing no response at all to the union’s continuous calls for bargaining, while the union has begun its indefinite sit-down strike at the factory, insisting on a guarantee of total employment. Amid all of this, the date for which the management set to begin the layoffs, June 8, continues to march ever closer.

Please direct questions or comments to [englishhani@hani.co.kr]