Renault Korea faces production delays due to union wage dispute
Renault Korea's unionized workers stage a walkout in front of its manufacturing facility in Korea's southern city of Busan, Monday. Courtesy of Renault Korea's union
Renault Korea faces increasing risks of delayed production of its Grand Koleos premium SUV, as the carmaker has reached a deadlock in wage negotiations with unionized workers.
The automaker launched the much-touted model in June, marking a new release for the first time in four years in the Korean market. But the escalating conflict between its management and labor union casts a gloomy outlook for the timely delivery of the vehicle.
Customers placed orders for some 17,000 Grand Koleos vehicles, but the protracted strike by the union is delaying their production and delivery to customers.
The conflict reached its peak on Monday after Kim Dong-seok, head of the carmaker's union, decided to go on a hunger strike at the company's manufacturing site in the southern port city of Busan.
More than 900 union workers also joined a rally urging its management to stop a lockout and resume negotiations.
The carmaker's labor union launched an all-out strike on Sept. 13, and management reacted by locking out some parts of the Busan plant. This is the first all-out strike by the Renault Korea union in three years and the first case of the union chief engaging in a hunger strike since 2012.
The union maintains a hard-line stance that it will continue the walkout until it reaches an agreement in the now-suspended wage negotiation.
Renault Korea's Grand Koleos SUV / Courtesy of Renault Korea
"The management launched the lockout unexpectedly before the recent Chuseok holiday season, but more than 65 percent of our unionized workers are participating in the strike, refusing to return to their workplace," Kim said. "We will get back to the dialogue table anytime once the management proposes any updated (negotiation terms)."
The union demands that the management increase the base pay to 73,000 won and offer a special incentive worth 3 million won to celebrate the launch of the new vehicle.
The company relocated some non-participating workers to some production lines. The carmaker said it is leaving the communication channel with the union open.
Renault Korea hopes to achieve a major rebound in the Korean market with the premium SUV. The carmaker's market share here has been declining for years due to a lack of new models.
The vehicle has been getting positive reactions from customers, as was shown by the initial order figure.
According to data from the Korea Automobile & Mobility Association, Renault Korea's vehicle production plunged by 26.8 percent to 51,801 for the first seven months combined from a year earlier.