South Korean Auto Unions Gearing Up For Strike

South Korea isn't as cheap as you would think. I believe the last time I looked, cost of living in Ulsan was around 10-15% cheaper than the region around their massive West Point, GA plant.

A COLA raise doesn't seem unreasonable but 30% of net income as bonuses seems a bit lofty, maybe I'm out of touch.

@28-Cars-Later Muscling in on corporate profits, while assuming none of the risk of financing and operating the business, is what unions do.

@28-Cars-Later No problem, just as soon as managers can figure out to make cars without workers, they can pocket ALL the money. But until then...

@28-Cars-Later Super: They have been working on it for years. And every year they get a little bit closer. And the progress has been quite substantial. Engine plants are now run with one third of the labor they were run with 30 years ago.

@28-Cars-Later They're not there now, though, nor even all that close. So guess what, they still have to deal with workers, whether they like it or not. Even Chinese wages are creeping up.

@28-Cars-Later They haven't figured out how to build cars without workers, but they have figured out how to build cars without *union* workers. Step 1: Build plant in the American south. You will probably have states and cities courting you with tax breaks and incentives. Step 2: Staff up with the pick of the local labor pool, paying more than they would make elsewhere but less than they would make in an old-school union facility. Step 3: Build good things and sell them for a profit. Treat your workers well and they'll keep the unions out for you. This approach seems to be working well for Hyundai, Nissan, VW, Mercedes, BMW, Honda, and Toyota; and appears to be the plan for Boeing and Airbus going forward.

@28-Cars-Later And they still have to pay those non-union workers well enough that they're not motivated to organize. Unions help unorganized workers a lot more than many people realize. The latter would end up being very sorry if the unions went away altogether.

The average salary in SK is around $32k and considering that 60% of the population lives in the greater Seoul metro area, $39k for living in lower cost Ulsan is pretty good, and that's only taking into account base pay. Back in 2006, a Hyundai worker w/ 26 years experience was making $65k, so one could do quite well working at Hyundai. Actually, a bit surprised that they went 4 years w/o a strike.

@28-Cars-Later Even if wages are due and get a boost, with the proximity of China to Korea and the fact GM has existing huge operations in China, don't the Korean unions ever think they are doing themselves a disservice by stirring up trouble? Couldn't you just see GM saying to hell with Daewoo and moving all of its operations to China if the unions keep it up?

@28-Cars-Later Business loves giving a low salary and a high bonus. The first reasons is taxation. Bonuses are often less taxed, need less social security or pension payments. Second reason is that if they are real bonuses and depend on results(unlike those of CEO's) they correlate with how well a firm is doing. If a firm is doing badly it has to spend less on wages. So Don1967, you are wrong with bonuses. They are used to let the workers solder part of the risk of operating the business

@super, Drop the Marxist hyperbole, please. Management is not asking to pocket "all" the money; they are quite willing to pay the workers the agreed-upon pay for the agreed-upon services they provide. And workers for the most part are willing to honor this deal, at least when they are not being seduced by Union Corporate. What we're talking about here are opportunists - people who did not assume any financial risk in the building of a business - seizing the rightful profits of those who did. You can band together and steal from the rightful owners for awhile if you want to, but in the long run you are only killing the goose that lays your golden eggs. @charly, nice try but I've never seen a bonus structure that took money out of a worker's bank account or repossessed their home. This is a risk which only owners face.

The only workers being fooled are those North Americans and Europeans who still think they are entitled to financial security when things are bad, and full partnership in their employers' business when things are good. For them, "global equalization" of wages is going to be a nasty wake-up call.

@don1967 I'm guessing that you think YOU are a lot more irreplaceable than you actually are. (If you're a business owner, you also may not have spent quite enough time thinking about how your customers are supposed to buy your stuff if they don't have any money.)

detroit-x, That will never happen in anyone's (who is alive) lifetime. Unless Mexico all of a sudden becomes a great place to live and half of China's population disappears. As for all the direct labor commentary: I'm under the age of 30, have been laid off once already and am working diligently to leverage a plant in Mexico. Sure, my life will suck for the next year, but I'll have a job. I can see the overhead cost differences between the 2 US, 1 Canadian and 1 Mexico plant I have been associated with, and while there are still advantages for everything north of the border (certainly not overhead), the gaps are quickly narrowing. Global programs are extremely difficult to keep on track, but OEM's are getting better at it every single day. Once that gap narrows, you'll see the same cooperation/flexibility Twin Cities displayed when they were on death row.

@don1967 Although I didn't make that point clear, that's part of what I'm saying.

@tresmonos That depends on the industry, and how closed-minded the US execs are at doing things here vs. overseas. There already have been reports of manufacturing coming back here because of non-wage problems, so the equalization of wages is just one more reason.

I bet part of it is Alabama doesn't have a bunch of preexisting, self-serving, short-sighted, union leaders with a perpetual list of reasons why the workers should feel unhappy.