Daewoo Loss $2.1 Million a Day : S. Korea Strikers Cut Auto Parts Pipelines

The assembly line at Daewoo Motor Co.’s main plant here was still Tuesday, and the parts shops nearly empty. At the front gate, 40 men wearing headbands demanding a democratic union were staging a sit-in.

Daewoo Motors has trouble, conceded Shin Young Suk, the plant’s general manager. As long as the line is down, Shin said, Daewoo will be losing $2.1 million a day in net income.

The line will be down at least through Friday. Monday was payday, and with their paychecks the plant’s 6,000 blue-collar workers were given a four-day paid vacation. Labor troubles at Daewoo’s suppliers had dried up the parts pipeline Monday, and that afternoon about 1,000 workers had begun the sit-in.

“Our basic strategy is to wait them out,” said Shin, noting that the number of protesters had dropped to 40 overnight. “And to hope we have the parts on hand to reopen Saturday. We shut down the line because we don’t have the parts, not because of those guys.”

130 Firms Affected

The problems here in Inchon, the port of Seoul, were multiplied across the country Tuesday. All four of the country’s industrial giants--Daewoo, Hyundai, Samsung and Lucky-Gold Star--were facing new labor disputes. Hyundai, whose subcompact car is South Korea’s best-selling auto export, closed down its line again Tuesday for lack of parts after resuming operations only Monday after a four-day shutdown. According to the Labor Ministry, operations at 130 companies were either shut down or hampered.

In the ports and industrial cities of the south, work stoppages hit auto makers, shipyards, textile and shoe factories, noodle companies and myriad parts suppliers. Public transportation also was affected to some degree in nearly every major city.

In the coal country northeast of Seoul, 18 mine operations were disrupted. Miners temporarily blocked roads and railways, according to press reports. In at least one incident, riot police firing tear gas drove demonstrators from a railroad station.

“If the current labor disputes are further aggravated to threaten the national economy and security, the government will take tough actions against them,” warned Labor Minister Lee Hun Kee. But so far the government, quick to take action against strikers in the past, has kept its hands off.

Strikes Disrupt Supplies

The wildfire of strikes and sit-ins began six weeks ago, after President Chun Doo Hwan agreed to accept democratic reform proposals, and has intensified in the past week. Strikes at small shops have disrupted supplies to factories, and the consequent shutdowns of the major operations now threaten to put their independent parts vendors out of business.

At Inchon, Sae Hwa Industrial Co. makes parking brakes and door latches for nearby Daewoo Motors, one of the giant company’s 300 outside vendors. (Daewoo also gets some parts from within the group. The heavy industry subsidiary, for instance, supplies engines for the auto subsidiary. But no engines have moved since last Wednesday when the heavy industry plant was struck.)

Phil Young Song runs a shop of 44 workers at Sae Hwa Industrial, a non-union firm. It had been a smaller operation, but he recently boosted his staff to keep up with orders from Daewoo, his sole buyer. The new employees, Phil said, organized a strike to shut him down for a day last week.

“We settled,” he said. “A half-and-half deal.”

Now he would like to pass on part of his increased costs to Daewoo, but he realizes the squeeze is on there as well.

Potentially at stake are South Korean exports, which have led the country’s economic growth on a blistering pace the past two years. According to the Labor Ministry, the labor disputes have cost South Korea $55 million in lost export earnings. And increased production costs are either going to add to prices, hurting competitiveness, or come out of profits.

But politically and socially as important is the growing difference between pay scales and corporate income. According to the Federation of Korea Labor Unions, the average South Korean worker put in a 54.4-hour, six-day week in 1986, for a monthly paycheck of about $370. Government figures say productivity has nearly doubled in the past seven years, while wages have increased only 40%.

Auto workers are among the highest paid. Here at Daewoo Motors in Inchon, Shin said it was difficult to fix an average wage. He estimated, however, that it is about 2.5 times the national per capita annual income and said that the company agreed in April to a 12% pay increase, almost double the national average of 6% to 7%.

The demonstrators at the gate Tuesday wanted more. As an annual bonus, which is paid in four increments over the year, they are seeking a figure six times their monthly salary, rather than the current four times monthly pay. They also asked a monthly family allowance of $6.25 for each dependent.

Want Democratic Unions

While the money issues are probably negotiable, the No. 1 demand has Shin and his fellow officials in management digging in their heels. It is the same issue that is No. 1 in most disputes around the country, according to press reports: The protesters at Daewoo say they want a democratic labor union. They say the present worker representatives constitute a company union.

Management says the sit-ins are being led by radicals, some of them suspected of being university graduates who falsified their job applications in order to infiltrate and organize the work force.

Where the truth lies is hard to determine. Even the responses within an industrial group differ. At Daewoo Motors, with a sit-in being conducted by 40 men out of a work force of 6,000, plus 3,000 white-collar workers, the company appears to be holding its employees in line. Press reports this morning said they had tentatively agreed to return to work Monday. However, at Daewoo Shipbuilding & Heavy Machinery Co. on Koje Island off the south coast, more than 2,000 workers reportedly took over the yard and barricaded a highway with commandeered forklifts until police forced them to disperse.

Meanwhile, politicians of the government and opposition parties, negotiating delicate democratic reforms and facing a presidential election late this year, seem reluctant to take sides, calling instead for nonviolence and compromise. The pocketbook issues of wages and bonuses are important to South Korea’s large blue-collar electorate. But so is the money for campaign chests that comes from big businessmen.