(며칠 전에 썼던 “그들은 왜 고공 크레인에 올라갔나”를 신혜경 @TerryWitch님이 영문으로 번역을 해주셨습니다. 고맙습니다.)
(This is a translation of the original posting by Jeongnghwan Lee. Visit https://journalismclass.mycafe24.com/media/archives/002015.html for the original Korean article.)
Thanks to the celebrity Yoijin Kim and the ‘Buses of Hope’, more people have become curious about what is happening at Hanjin Heavy Industries & Construction Co. LTD.(hereafter, ‘HHIC’) and about Jinsook Kim who has been conducting a sit-down protest on top of the mammoth crane #85 for 163 days. But few people know the reason for this desperate struggle.
Last February, HHIC dismissed 172 manufacturing workers who had refused to accept voluntary retirement, which the company had ‘recommended’ to 400 workers. The union at HHIC went on strike and the company countered by locking the workers out. While most of the workers accepted voluntary retirement and left the worksite, the local labor relations commission rejected the application by others for a relief of the unjust layoffs.
The company claimed that difficulties resulting from a complete lack of shipbuilding orders in the last two years made the layoffs unavoidable. While HHIC did record 51.7 billion won net losses last year, it is questionable that the mass voluntary retirement and layoffs were unavoidable.
First, HHIC’s deficit last year came from the cost of interest on excessive loans, losses related to the valuation of the Subic shipyard in Philippines and the allowance for bad debts in the construction division. Operating profit for HHIC’s shipbuilding division last year was 13.7%, much higher than the rival companies.
Second, the Subic shipyard, in which HHIC holds a 100% stake, began making profits from Q1. The shipyards has already received orders for the upcoming 3 years while the Youngdo shipyard has had no orders for last 2 years.
Third, there are also accusations that the company might minimize or close the Youngdo shipyard gradually so as to move production to Subic. In the Philippines, labor productivity is 35% of that in South Korea while the wage rate is 10%. HHIC can expect a huge cost reduction from the shipyard relocation.
Fourth, HHIC has huge real estate assets. The real estate value of the Yuldo area on which the Incheon Northern Port will be located is expected to reach 2 trillion won once the repurposing is approved. The Eastern Seoul Terminal plot and real estate around the Amnam-dong area in Busan were worth 275 billion won by book value last year.
Fifth, the gain on real estate sales is expected to be huge. The gain of 125.1 billion won from the Ulsan shipyard sale was partly reflected last April and the gain from the plot at Sangyedong, Seoul, now on sale, is calculated to be 40 billion won. Hanwha Securities Co. reported that HHIC’s gain on real estate sale is expected to reach 100 billion won this year.
To recap, HHIC’ difficulties are not severe enough to justify large-scale layoffs. Though the company reported a loss last year, this was due to the Subic shipyard construction cost and the allowance of bad debts in construction division. The workers are not at fault for these problems. They are the results of bad management.
The claim that the Youngdo shipyard has failed to take orders over the last 2 years is hard to accepted at face value. The orders placed 2 years ago are sufficient to run the shipyard till the first half of 2011. The shipyard can take additional orders from the second half. There is also a strong possibility to take over orders from the Subic shipyard.
According to the Busan Provisional Chapter of the New Progressive Party, “The company’s argument that the layoffs were inevitable because of low profitability is a lousy lie.” They also commented that, “The argument that the layoffs were due to the lack of orders in the last 2 years is a distortion of the intrinsic nature of the issue and a glossing over of the problem.”
Most importantly, HHIC will see net profits this year and gains from real estate sales are expected to be huge. Securities firms are releasing ‘BUY’ signs. HHIC’s restructuring is more likely a strategy for increasing profit than something inevitable.
HHIC’s restructuring seems to go after a thoroughly planned scenario to relocate its domestic manufacturing to overseas site. Many companies including HHIC have made a trend to escape to overseas facilities for lower labor cost rather than reinvest to domestic manufacturing facilities.
According to Hongkyun Kim, a researcher of Dongbu Securities Co., a monthly wage at the Subic shipyard in the Philippines is 9,000-10,000 pesos, approximately 230,000 – 260,000 won. This is 1/10 of that of wages in Korea and 1/2 of wages in China. Even considering low productivity, reduction of the labor costs through moving production to Subic is a given fact.
“The local shipbuilding industry, especially the general merchant shipbuilding division, must compete with Chinese companies.” Seunghyn Park, an IBK Investment Security Co. researcher, pointed out. “The strategies for doing this are either to focus on value-added shipbuilding which has some technologic advantages, or to expand shipyards to achieve cost advantages.”
“HHIC chose the second strategy and is regarded as quite successful,” he added. “The Subic shipyard is predicted to have a sharp increase in output. It is expected that the Subic shipyard can compensate for the earning vacuum of the Youngdo shipyard.”
The problem is that the rush of local companies to move production overseas will accelerate if neglected. It’s not a new phenomenon for capital to cross borders to seek more profits, but should not be allowed if it means transforming a healthy company into an insolvent one and transfer the responsibility to the workers.
“A profitable company filing for bankruptcy was inherently impossible in the past, but recently layoffs in preparation for overseas relocation are increasing,” Jongkang Ha, the former director of the Hanwul Labor Problem Institute, pointed out. “The requirements for restructuring should be strictly applied to regulate the indiscrete layoffs the sake of simple management improvement.”
The mammoth crane #85 where Jinsook Kim has staged her protest is the very one on which Ju-ik Kim, former president of the HHIC labor union, hung himself 8 years ago after a 129 days-long sit-in protests against layoffs. “We can save them only when we remember them,” Ha asserted.
Jinsook Kim left a letter before climbing up the crane with the following words: “Instead of being a place of death, tears, and grief, crane #85 should be a place of victory and rebirth. I will embrace the spirit of Ju-ik Kim wandering around the crane and will come down alive.”
Almost 170 days passed after her lines.