The fortunes of Renault Korea, a foreign automaker in the domestic complete vehicle market, and GM Korea are diverging. Renault Korea concluded wage negotiations last month without any significant issues, while GM Korea has seen ongoing labor disputes, with the union entering a strike. Factors cited for the two companies taking different paths include the investment from headquarters in their Korean operations, the regions they export to, and differences in the unions' tendencies.
According to the complete vehicle industry on the 8th, the GM Korea union has entered into partial strikes since the 19th of last month after failing to narrow the gaps in its stance during this year's wage and collective bargaining negotiations. This month, the union staged strikes from the 1st to the 3rd, working 4 hours each day, and stopped factory operations for 6 hours on the 4th.
The GM Korea union is demanding a 141,300 won increase in base salary and a performance bonus of 15% of net profits. They also argued that decisions like the closure of direct service centers and the sale of part of the Bupyeong plant should be re-evaluated from scratch. The management's rejection of these demands has led to a stalemate in the negotiations for three months.
Renault Korea concluded wage negotiations on the 26th of last month. After 13 rounds of negotiations, the two sides agreed on conditions including an increase of 103,500 won in base salary, a 150% productivity incentive payment, and a settlement bonus of 2.5 million won. Throughout the negotiation process, the union did not engage in any strikes or disputes.
Industry experts interpret that the different movements observed in the negotiations of Renault Korea and GM Korea unions were influenced not only by the simple differences in compensation but also by the different roles and status both companies hold at their headquarters.
In the case of Renault Korea, it is receiving significant investments as the development and production base for the Renault Group's Sports Utility Vehicles (SUVs) targeting the global market. The Renault Group is currently running the 'Aurora Project,' which is a medium- to long-term strategy for Renault Korea to develop and produce three new SUV models. The first new model, the mid-sized SUV Grand Koleos, was revealed last year and recorded impressive sales, with new models scheduled to be launched next year and the year after.
Accordingly, Renault Korea has secured long-term growth and business sustainability, allowing the management to pursue compensation based on performance improvements, while the union was able to conclude negotiations without unnecessary disputes.
In contrast, GM Korea's role is effectively limited to that of a subcontractor for small SUVs. Most of the production of small SUVs like the Trailblazer and Trax crossover, which are produced domestically, is exported to the United States. The GM Korea union has continuously demanded the allocation of new vehicles and the authority to develop new electric vehicles from GM headquarters, but these requests have not been accepted to date.
Recently, GM Korea also announced plans to sell some land within its Bupyeong plant and direct service centers. While it has been uncommunicative regarding new investments, it has taken steps to reduce domestic assets. The union's demand to halt asset sales during this year's negotiations reflects the prevailing concerns that headquarters may downsize or close its Korean operations, according to analysis from the complete vehicle industry.
The high tariffs on vehicles in the United States have also impacted the status of Renault Korea and GM Korea. The Donald Trump administration in the U.S. imposed a 25% tariff on imported cars starting in April. As a result, GM Korea, which exports most of its volume to the U.S., has faced a direct hit. From GM headquarters' perspective, profitability has significantly deteriorated, leading them to consider whether to continue maintaining operations in Korea. In fact, there has been an increasing outlook domestically that GM may ultimately exit the Korean market.
In contrast, Renault Korea is exempt from tariffs as it is not included in the export target regions for the U.S. The Grand Koleos is being exported to Central and South America, the Middle East, and Africa. The small coupe SUV Arkana, produced by Renault Korea, is primarily sold in Europe.
Many believe that whether the unions are affiliated with higher-level organizations has also influenced the wage negotiation processes of the two companies.
The Renault Korea union, which is not affiliated with a specific union sector, has often concluded wage negotiations smoothly without major issues. It achieved three consecutive years of labor dispute-free wage agreements since 2015 during its Renault Samsung era, and it has either avoided disputes or reached agreements earlier than other complete vehicle manufacturers afterwards.
Francois Provost, who led Renault Samsung from 2011 to 2016, directly expressed his gratitude to the union for participating in the company's restructuring efforts and was recognized for his contributions in Korea when he became the president of the Renault Group this year.
The GM Korea union is part of the Korean Confederation of Trade Unions (KCTU), the largest labor organization in the country. As a result, the union often determines the level of strikes based on directives from the higher-level organization and has, in fact, staged strikes more frequently compared to Renault Korea. This year, many manufacturing companies, including Hyundai Motor, have also gone on strike during wage negotiations, a scenario likely influenced by the KCTU's directives.
An industry source said, 'With the recent passage of the yellow envelope law (revisions to Articles 2 and 3 of the Labor Union Act) in the National Assembly, there is a prevailing atmosphere in the labor sector showing strength.' They noted that the GM Korea union's decision to strike was influenced by movements from the metalworkers' union and concerns over potential reductions of GM headquarters' business sites in Korea.