[Asia Economy Reporter Jeong Dong-hoon] It has been 45 days since over 120 subcontractor workers supplying ship blocks (the basic steel structures of ships) and equipment to Daewoo Shipbuilding & Marine Engineering (DSME) started their strike. It has been 29 days since they began an unprecedented dock occupation protest. DSME, which had been recording trillion-won operating losses but recently rebounded by consecutively securing orders for eco-friendly ships such as LNG (liquefied natural gas) carriers, has come to a halt again.
◆Why is the damage from the dock occupation increasing?= According to DSME and industry sources on the 15th, the subcontractor union under the Korean Metal Workers' Union in Geoje, Tongyeong, and Goseong (subcontractor union) has been striking since last month 2nd, demanding ▲a 30% wage increase ▲recognition of full-time union officials ▲a 300% increase in bonuses, and continues the strike to this day. Since the 18th of last month, seven union members belonging to the subcontractor union have occupied the crude oil carrier and dock at Dock 1 of the Okpo Shipyard. Occupying a ship under construction is illegal under the Enforcement Decree of the Labor Union Act.
The dock is where ships are built and launched into the water. If this place stops, work on other production lines such as painting, piping, and welding is delayed, causing serious damage to the shipbuilding industry, where the construction deadline directly affects performance. This is also why strikes in the shipbuilding industry have not escalated to extreme protests like dock occupations until now. The Okpo Shipyard Dock 1 currently occupied by the union is the world's largest, equivalent to the size of nine soccer fields, capable of building four ships simultaneously. Four ships are under construction here, but the launching of an oil tanker scheduled for last month has been indefinitely postponed. To launch a ship, the dock must be filled with water, but due to the union's occupation protest, seawater cannot be filled in the dock. As a result, DSME's losses are snowballing. DSME is estimated to be losing 25.9 billion KRW in daily sales and 5.7 billion KRW in fixed costs, with cumulative losses exceeding approximately 600 billion KRW since the strike began.
Minister of Trade, Industry and Energy Lee Chang-yang, urging the strike to end, pledged a swift resolution to the DSME strike at the Korea Chamber of Commerce and Industry Jeju Forum on the same day. Minister Lee said, "The industry is suffering significant damage, so the labor and management parties must negotiate immediately," adding, "The government and related agencies are expected to cooperate. We are considering ways to create a negotiation atmosphere."
DSME has been experiencing increasing operating losses over the past five years due to a sharp decline in orders and rising steel prices. Last year's operating loss reached 1.7547 trillion KRW, and the first quarter of this year recorded an operating loss of 470.1 billion KRW.
◆Small business owners also say "Stop extreme protests"=Small business owners in Geoje, Gyeongnam, have also urged both labor and management to engage in negotiations and dialogue, warning that the prolonged strike by DSME subcontractor workers could threaten their livelihoods.
The Geoje Small Business Association held a press conference at Geoje City Hall on the day, claiming that the prolonged DSME subcontractor union strike, which has lasted over 40 days, has brought a severe crisis to the local economy.
They said, "Small business owners in the Geoje area are struggling daily for survival amid increasing hardships," adding, "The subcontractor union strike is expanding into a nationwide strike with the political colors of the Korean Confederation of Trade Unions." They further urged, "We strongly request that the strike, which causes distrust among overseas shipowners amid the shipbuilding boom, be ended as soon as possible," and added, "There is growing public distrust and dissatisfaction toward this strike."
They called on DSME and in-house partner companies to open channels for dialogue and urged the union to stop extreme protests. They emphasized, "The strength to overcome the shipbuilding crisis comes from labor-management harmony and coexistence energy," and "Both sides should actively engage in dialogue to alleviate the severe pain of small business owners."
The police are currently conducting supplementary investigations on three individuals, including the head and deputy head of the Korean Metal Workers' Union Geoje-Tongyeong-Goseong Shipbuilding Subcontractor Branch, on charges including obstruction of business.
They are also considering applying for arrest warrants for union members protesting on the oil tanker tank railings. However, judging from the current trend, it seems that issuing arrest warrants for law enforcement will take some time. The police applied for arrest warrants earlier this month but received requests from the prosecution for additional evidence and have resumed investigations. They sent a fourth summons with a deadline of the 22nd, but it is unlikely that the union leadership will voluntarily visit the police station. If the union leadership does not appear by the 22nd, the police plan to send a fifth summons or immediately apply for warrants.
◆Strike continues on parallel tracks without negotiation=Although the strike is prolonged, there is no sign of an exit. After the government designated the subcontractor union's dock occupation as "illegal" and urged its cessation the day before, the union began a hunger strike protest.
The subcontractor cooperation council and the union held three rounds of negotiations earlier this month but failed to even open the negotiation table after the 5th due to significant differences in views. The union insists that the 30% wage increase is "to realize low wages," claiming, "The real wages of subcontractor workers have fallen by about 30% over the past five years, and they face economic difficulties as their wages are at the minimum wage level." The management side states that it cannot accept all the union's demands.
There are about 100 in-house partner companies at DSME, employing a total of 10,000 people. Among them, about 120 subcontractor union members are participating in the strike. Although the negotiation parties are the labor and management of each partner company, the union emphasizes the role of the primary contractor DSME and its major shareholder, the Korea Development Bank. Their argument is that "since partner companies operate by receiving progress payments from DSME, DSME must make decisions for wage increases and recognition of union activities." However, DSME and the Korea Development Bank find it difficult to intervene as it is a labor-management issue of partner companies. The primary contractor's involvement in wage negotiations may violate the Subcontracting Act.
As the strike prolongs, DSME management has taken a firm stance, urging the strike to end and calling for punishment of the union's illegal acts. On the 7th, DSME President Park Du-seon held a press conference, saying, "We earnestly request that the long-awaited shipbuilding boom, job creation through it, and revitalization of the local and national economy not be wasted due to illegal strikes," adding, "This could threaten the survival of the shipbuilding industry. We ask for the restoration of legal order regarding all illegal acts occurring in this national key industry."
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