Suppliers Keep Korean Auto Boom Rolling
As the world recedes, South Korea grows. First Hyundai registers double digit growth in the United States and now other automakers want a piece of the South Korean action. The Korean Times reports that Renault-Nissan announced that they will increase the amount of their South Korean parts suppliers from 28 to 100 by 2013. 108 major subcontractors took part in a conference along with officials from Renault-Nissan’s purchasing organisation.
Christopher De Charentenay, head of Renault-Samsung’s purchasing division explains, “Most Korean car parts makers have technically reached a globally competitive level. They can produce fast, and at a lower cost thanks to the currently weak won.” Eat your heart out, Japan.
It’s not just Renault-Nissan which have fallen in love with South Korea, Volkswagen are looking East as well. In October, officials from Volkswagen’s purchasing unit visited 25 local manufacturers to ascertain and choose suppliers of components to them.
But Korea is hardly perfect. In fact, China’s SAIC might have already expanded more overseas had its purchase of Ssangyong played out well. Instead, the notorious Korean labor unions brought Ssangyong crashing to a fiery ( literally!) liquidation. Despite the generally positive news coming out of the Korean auto industry, labor unions continue to be an X-factor that foreign firms have to take seriously.
Japan and Germany also have strong labor unions. Sometimes a skilled person operating advanced machinery can produce better output than 100 cheap peasants. The failure of the Detroit automakers with the help of the UAW involved a special kind of stupidity that cannot be generally applied to all automakers or unions.