Ssangyong First Korean Automaker to Wrap Up Wage Deal

There is good news and bad news out of South Korea’s Ssangyong Motor.

On the good side, Ssangyong is the first among the five Korean automakers to successfully wrap up this year’s wage negotiations, as 67% of 3,295 unionized workers ratify a new wage agreement July 26.

The pact includes a monthly increase of 53,000 won ($47), a performance-based bonus of 2.5 million won ($2,223) and 150 shares of common stock. Ssangyong notes this is the eighth year in a row a wage agreement has been reached with no interruption in production.

By contrast, workers at the other four Korean automakers went on their annual vacations July 31 with labor negotiations still up in the air. Both the Hyundai and Kia branches of the Korean Metal Workers Union have approved strike action and are demanding monthly raises of 154,883 won ($138) and a bonus amounting to 30% of 2016 net profit.

They are also pressing for a switch from an hourly paid to a flat salary system, and elimination of one hour from the 9-hour afternoon work shift.

GM Korea is still in the woods. The union has approved strike action and is asking for a 50,000 won ($44.57) monthly wage increase and a bonus of 9 million won ($8,000).

Positive labor relations is the good news at Ssangyong, alongside the automaker’s June sales report for the Korean market. Domestic sales rose 8.1% to 10,535 units, breaking the 10,000-unit mark for the second month in a row. For the first six months domestic sales set a 13-year record high of 54,184 units, a spike of 5.5% over like-2016.

But there is bad news from most overseas markets. For June, export sales plunged 51.5%, to just 2,162 units. The export decline dragged down Ssangyong’s global sales for the month 12% to 12,697. Exports for the first half were down 29.3% to 16,876.

For the first half, the plunge in exports dragged down total global sales 10.4% to 70,345 units.

The financial news is worse, with revenue falling 4.8% for the first six months to 1.7 trillion won ($1.5 billion) and the automaker reporting a 22.1 million won ($19.7 million) operating loss.

For the first half, Ssangyong booked a net loss of 17.9 billion won ($16 million), compared with a profit of 20.4 billion won ($18 million) year-ago.

Ssangyong notes the July launch of a new Tivoli Armour upgraded version of the Tivoli is expected to maintain leadership in the domestic small SUV market and make further conquests in Europe. It also will roll out a new Korando Sports pickup by early next year. That model will be followed sometime in 2019 by an all-new Korando C compact SUV.