Hyundai Heavy management, union reach tentative agreement for 2nd time

By Lee Hyo-sik

Hyundai Heavy Industries (HHI) said Thursday that management and union leaders reached a tentative agreement over wage hikes for the second time, a month after union members rejected the first preliminary accord.

Company executives and union leaders resumed negotiations on Feb. 6 in a bid to reach a settlement before the Lunar New Year, which falls on Feb. 19.

Both sides first began wage negotiations in May last year and reached a preliminary accord on Dec. 31. However, 66.5 percent of unionized workers voted down the pact on Jan. 7, demanding a larger base salary hike.

Following a month-long break, management and union leaders restarted talks and came to an agreement six days later. But it remains to be seen whether union members will approve the settlement.

Under the accord, Korea’s largest shipbuilder will increase the base salary by 2 percent, or 37,000 won, as well as pay a 2 million won bonus and distribute company stock worth 1.5 times the workers’ base salaries. If workers vote for the agreement, they will get 200,000 won gift certificates and take paid leave on Feb. 23.

The labor union said it will hold a vote on Feb. 16, asking members about whether to accept the deal or not.

“Management and union leaders worked hard to iron out the differences,” an HHI spokesman said. “We are all one family and we need to work hard to overcome current difficulties. We believe that union members will approve the tentative accord and play their part in revitalizing the company.”

The shipbuilder said its 2014 revenue reached 52.58 trillion won, down 3 percent from 2013. It posed a 3.25 trillion won operating loss last year, compared with an 802 billion won operating profit a year earlier.

In the fourth quarter alone, its revenue declined to 13.85 trillion won, down from 14.82 trillion won the previous year. Its operating loss narrowed to 22.3 billion won from 87.1 billion over the one-year period.

Unionized workers staged a series of partial strikes to force the management to make greater concessions over the past nine months.

The union had demanded the company increase the base salary by 6.51 percent (132,000 won), and pay a lump sum bonus, 2.5 times the base wage, among others.

However, the company refused to accept the demand, saying the wage hike was not practical when it was losing money.

In 2014, the shipbuilder's bottom line deteriorated because of fierce competition for contracts amid a sluggish global market. To secure orders, it had to build ships and offshore plants at lower prices, which chipped away at its profitability.

Chinese shipbuilders in particular have caught up with HHI and other Korean manufacturers, making it harder for local players to win orders abroad. Falling oil prices have also slashed demand for oil tankers and other types of ships.

To ride out the worst crisis in its 42-year history, the shipbuilder has introduced overhaul measures.

The company dismissed 31 percent of its executives and reduced the number of its business units from 58 to 45 to cut costs. It plans to cut 1,500 workers, or 5.4 percent of its workforce of 28,000, through a voluntary retirement program.