In South Korea, union leaders never have been bashful about taking their membership into the streets to make a point.
And with a series of demonstrations and strikes in April that crippled Daewoo Motor Co., they made their point loudly: A foreign buyer will not have a free hand to shut down plants and lay off workers. With five assembly plants in Korea and nearly a dozen overseas, there are more than 50,000 jobs at stake within the Daewoo organization.
'Whichever company ends up taking over Daewoo Motor should provide concrete measures to protect our jobs and grow Daewoo into a competent global automaker,' said Cho Yang-Hee, executive manager of the Daewoo Motor Labor Union.
Nonetheless, it appears highly unlikely that Daewoo can survive without major cutbacks. The company owes $16 billion to its creditor banks, and the government has okayed a plan to sell the company through an auction. General Motors, Ford Motor Co., Fiat Auto, DaimlerChrysler and Hyundai all have expressed interest.
Contrary to popular belief, the union is not completely opposed to a merger with a foreign automaker, Cho claimed. 'We are not dead set against it,' he said. 'If special conditions aren't imposed by the government, then we're just afraid Daewoo Motor might end up as nothing more than a production base of a foreign automaker.'
The union stops short of endorsing any of the bidders. However, there is widespread anxiety among union and management ranks over the prospect of a General Motors takeover. Wrangling over marketing rights and access to GM technology led to a bitter split in 1992 of the former partners, a sore point many Daewoo employees have not forgotten. 'Anybody but GM' seems to be a widely held view among Daewoo's white- and blue-collar workers.
Daewoo employees had been staging minor work stoppages for several months. Their efforts drew attention in early April when the labor unions of Hyundai Motor and Kia Motors threw their support behind the Daewoo union. Together, the unions staged a nationwide general strike that stopped Korean assembly lines for a week.
The strike resulted in production losses of 72,000 units or about $658 million. Hyundai and Kia workers returned to their jobs, but Daewoo workers have vowed to continue work stoppages.
More radical elements of the labor movement are demanding that the government take Daewoo Motor off the international auction bloc and nationalize the carmaker. The company would be privatized once it returns to financial health.
Cho, the number two man within the Daewoo Motor labor union, concedes that Daewoo Motor's problems are the result of mismanagement. 'Management has been recklessly pushing ahead with its global management strategy without any prudent consideration of its financial state,' he said. 'Investments in the expansion of overseas production bases was imprudent to say the least.'
In the union leadership's view, the money would have been better spent on research and development, particularly on powertrains. The company also needs an infusion of experienced managers who 'are very considerate of laborers' interests,' Cho explained.
The ailing Korean automaker urgently requires additional operating funds, Cho said. The scarcity of funds is hindering Daewoo's marketing efforts. With the exception of the Matiz minicar, Daewoo's cars are fast losing market share to Kia and Hyundai. As a result, Daewoo's capacity utilization rate has plunged to 40 percent. 'We're going from bad to worse,' Cho lamented. Research efforts also have been hurt by the shortage of funds, he revealed. New model projects are being delayed and risk being canceled.
Asked what message he had for the winning bidder, Cho replied: 'Job security is our first priority... Any foreign automaker should guarantee our right of collective bargaining.'
Cho also wants guarantees that Daewoo's future owner will maintain the brand and upgrade Daewoo's technology.
Rift with suppliers?
Despite his concerns about GM, Cho was circumspect about a possible takeover by Hyundai Motor. This was because of fears among Daewoo suppliers that Hyundai would not do business with them. 'I know that the Daewoo suppliers have agreed to stage a protest against Hyundai's takeover of Daewoo Motor,' Cho said. 'They are very concerned that Hyundai's takeover of our company might jeopardize their contracts.'
However, Daewoo suppliers also want to protect themselves in the event of a merger with a foreign partner. The suppliers are pressing the government to limit the foreign equity stake in Daewoo Motor to no more than 60 percent, with the balance distributed among state-owned banks and other domestic investors.
For the Korean government, the auction is a critical test of the economic policies that stress bold financial reform, greater transparency in the management of the chaebols, or Korean conglomerates, and the need for more foreign investment. The credibility of those reform efforts could be severely undermined by a takeover of Daewoo by Hyundai.
You can e-mail Correspondent Oles Gadacz at [email protected]