South Korean Auto Union Calls for Strike

Ssangyong Motor's union is protesting massive layoffs.

The union of South Korea's ailing Ssangyong Motor on Jan. 5 called for its members to go on strike, in protest over potentially massive layoffs by its Chinese owner. The union said that workers were voting on Jan. 5 and 6 to decide if they should stop work.

Ssangyong has a total of 7,100 employees, of whom 5,100 are assembly line workers. It was acquired by Shanghai Automotive in 2004. Ssangyong is falling into a financial crisis amid slow auto sales and a dearth of operating funds from its parent, Shanghai Automotive Industry Corp.

The union said managers were forcing workers to sign up for a written resolution aimed at making job cuts easier and buying time to transfer auto technology to the Chinese parent company. "Only overwhelming support for strike can guarantee our survival. Only a landslide vote for strike can thwart the conspiracy of the Shanghai capital," read the union statement.

Last month, Seoul's JoongAng Ilbo newspaper reported that Shanghai Automotive had offered to axe 2,000 jobs, almost a third of the Ssangyong workforce, in exchange for a $200 million credit line. Ssangyong management denied having worked out a layoff plan, but another economic daily based in Seoul said the proposed redundancies would be 3,000.

Ssangyong, which failed to pay workers on time last month, received $45 million from Shanghai Automotive in late December for the development of a new sports utility vehicle, the company said. It said it would disclose steps to stave off a liquidity crisis on Jan. 8 after talks with the Chinese parent.

Shanghai Automotive has sought support from South Korea's government and local creditors, including Korea Development Bank which has refused to offer new loans unless the Chinese firm helps first. The Chinese owner is known to have demanded wage cuts and redundancies at Ssangyong, but no details have been given. It has reportedly been threatening to abandon the automaker in January unless its demands are met.

The company expects a net loss of more than 100 billion won (US$76 million) for last year due to a slump in demand.

Ssangyong halted production for two weeks on December 17, citing sluggish sales, but work resumed on Jan. 5.

Copyright Agence France-Presse, 2009

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