At the cosmetics original design manufacturing (ODM) firm Kolmar Korea(161890), a labor union was formed for the first time in 36 years since its founding. The Korean Chemical, Textile & Food Workers' Union (KCTFU) under the Korean Confederation of Trade Unions (KCTU) said on the 3rd that the Kolmar Korea branch officially launched. It came three weeks after Kolmar Korea Co. released its record quarterly results.
Kolmar Korea Co. posted 861.3 billion won in sales and 110.3 billion won in operating profit on a consolidation basis in the second quarter of this year. Operating profit rose 50.2% from a year earlier, topping 100 billion won in a quarter for the first time. Orders surged as more indie brands expanded overseas and the sun care peak season overlapped.
According to the industry on the 11th, what the union took issue with at its launch was precisely these "orders." The union said orders have piled up for two months amid the K-beauty boom, but a shortage of workers has intensified workloads, and staffing or equipment efficiency aligned with that reality has not materialized. Citing the company's attempt to change work arrangements in a news release, the union said, "Enough of the one-way street." Its founding declaration put forward reasonable evaluation and compensation commensurate with effort and responsibility as core values. However, the union is said not to have delivered specific demands to the company yet.
The company said it has steadily expanded facilities and staffing in step with increased volumes. A Kolmar Korea Co. official said, "In response to the recent rise in production volume, we are continuously pursuing expansion of production facilities and reinforcement of personnel," adding, "We are expanding the Sejong plant with completion targeted for April next year, and we also plan medium- to long-term capacity expansions such as Sejong Plant 2 and the Incheon color cosmetics plant." The official continued, "We are continuously hiring needed personnel across all production, including manufacturing, filling and packaging, and logistics," and said, "Going forward, we will sufficiently review on-site feedback and communicate with the union where necessary."
◇ If ODM stops, indie brands take a direct hit
With the first union formed in the ODM sector, the K-beauty industry is watching closely. As of the first half of this year, the number of clients for Kolmar Korea Co. and COSMAX(192820) each reached around 5,000.
For indie brands without their own factories, ODM is effectively the only production line. If ODM factory lines stop due to a strike, delivery schedules for multiple brands that outsource production there could be shaken at once. For indie brands, whose competitiveness depends on the speed of new product launches and export timelines, the hit would be inevitable. However, the company said union activity has only just begun and talks have not even started, so it is not yet a situation to worry about immediate production disruptions.
Some observers say that since results and facility investments have both increased, union demands may ultimately converge on "rewards in line with growth."
◇ Starbucks, Coupang… union risks spread to K-consumer goods
Like Kolmar, unions are forming amid boom times across retail and consumer goods. In July, Starbucks Korea formed its first union, 27 years after entering Korea in 1999. The Starbucks union argues that staffing per shift is shrinking while promotions and events are increasing.
Orion(271560) posted record results last year with 3.3324 trillion won in sales and 558.2 billion won in operating profit, but when management proposed a 2% raise in this year's wage talks, the sales division union launched the company's first partial strike in June since its founding. The dispute was settled at a 3.5% increase a day before a full-scale strike. At Coupang, a union that employees at headquarters and all affiliates can join launched in June last year. Despite unprecedented rapid growth, the union says employees' sacrifices are taken for granted under the banner of customer first.
Regulatory changes are also fueling union expansion. With the amended Trade Union and Labor Relations Adjustment Act (the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers) allowing subcontract workers to demand talks with the prime contractor taking effect in Mar., the entire multilayered employment structure of retail and consumer goods—store-in-store sales staff, logistics subcontractors, ODM partners—has a greater chance of coming to the bargaining table.
Seo Yong-gu, a professor in the business administration department at Sookmyung Women's University, said, "After the semiconductor-triggered bonus controversy, there is growing momentum in every thriving sector to say 'let's raise our voices,'" adding, "Industries are cyclical, and each sector's exclusive competitiveness in the global market differs, so labor and management should be prudent when discussing compensation."