“There have been many times in the past when we reduced the operating rate or had less work. However, it's the first time the factory has officially shut down, and a sense of anxiety is coming over us.”
“When talks of restructuring arise, our partner companies will be the first to lose contracts. There is a lot of concern.”
Hyundai Steel's rebar plant, which has halted operations for the first time since its founding due to the construction market downturn. On the afternoon of the 7th, when we visited the factory in Songhyun-dong, Incheon, the sounds of union labor songs floated from a banner reading ‘Unite, Fight, Victory for 24-hour Negotiation’.
Hyundai Steel and its labor union have been negotiating wages and the collective agreement (labor-management negotiations) since September of last year and reached a tentative agreement on the 10th of this month. The company proposed an average performance bonus of 26.5 million won (base salary 450% + 10 million won) and a wage increase of 100,000 won, but the union under the Korean Confederation of Trade Unions has continued to strike, demanding additional payments. After about 11 hours of meetings, they agreed to ‘base salary 450% + 10.5 million won’ and a wage increase of 101,000 won.
Hyundai Steel, which recorded a net loss of 65 billion won last year, announced on the 27th of last month that it would shut down the Incheon rebar plant for the month of April. It also declared emergency management, cutting salaries for all executives by 20%.
Hyundai Steel, which has factories in Dangjin, Incheon, Pohang, and Suncheon, is the number one rebar and section steel company in the country. The Incheon plant has been producing rebar, H-beams (steel with an H-shaped cross-section), stainless steel (STS), and rebar products.
In September 2023, stainless steel production, which lost competitiveness due to the influx of low-priced Chinese products, was halted. The annual production capacity of rebar and H-beams at the Incheon plant reaches 1.5 million tons and 2 million tons, respectively.
About 400 employees are not reporting to work due to the closure of the rebar plant. Including about 70 employees working in smaller plants, employees from the 60- and 90-ton steelworks are receiving 70% of their wages during the suspension. The number of employees at the Incheon plant, which once reached 3,000, has now decreased to about 1,300.
On the seventh day since the rebar plant's operations were halted, employees met expressed their anxieties. One employee we met in front of the factory said, “I understand it is not an unconditional shutdown, but a supply adjustment,” but added, “The longer the rumors about production cuts go on and the longer the shutdown is formalized, the more anxious I feel. People around me ask if I'm okay.”
Another employee in their 30s, Lee said, “I will be transferred to another department to avoid being laid off, but if the factory closes, I will have to learn new work. I'm older now and have a family, so it's not easy to start over from the bottom, and many people are worried.”
Employees of Hyundai Steel's partner companies met at the factory and were worried about not being subject to restructuring. About 73 employees who transitioned from a partner company to Hyundai Steel’s subsidiary three years ago are also on suspension.
An employee of Hyundai ISC, who is 40 years old, said, “I understand that discussions about performance bonuses are happening at Hyundai Steel and that voluntary retirements are also being considered. When restructuring talks arise, we are the ones who are most affected. There is a lot of concern that contract work may no longer continue.” Employees who worked at the closed stainless steel factory in Incheon in 2023 were reassigned elsewhere.
Due to the worsening market conditions, other steel companies are also reducing their production. Dongkuk Steel Mill has lowered its plant operating rate from 60% last year to 50% currently due to the downturn in the construction market. The production that is still ongoing is done during night hours when electricity costs are cheaper.
The Hyundai Steel labor union also pointed out the lack of new investments as an issue. One union official noted, “Despite the recently announced need for investment amounting to $5.8 billion (about 8.5 trillion won), we have continuously requested new equipment investments, but nothing has been done. Aging leads to decreased productivity, and production capacity will inevitably decrease.
A representative of Hyundai Steel stated, “We invested in factory safety equipment last year, and we are not in a position to discuss further investments at this time.”