On Aug 28, South Korea’s shipbuilding industry is bracing for a coordinated strike by the joint labor union of shipyard workers, involving employees from the country’s leading shipbuilders. The strike, which is set to last between three and five hours, marks a significant moment for the industry, which is experiencing its first major boom in years. However, there are concerns that the strike could disrupt production and delay deliveries.
At HD Hyundai Heavy Industries (HD HHI), part of the Korean Metal Workers’ Union (KMWU), all union members will now join the strike from 2 p.m. to 5 p.m., expanding beyond the initial plan for only union leaders to participate. The HD Hyundai Samho union, also affiliated with the KMWU, began its strike at 1:30 p.m. and plans to continue until 5 p.m., while the Hanwha Ocean union will hold a four-hour strike with full membership participation. HSG Sungdong and K Shipbuilding are planning partial strikes. The labor union of HD Hyundai Mipo, which has not yet obtained the right to strike, conducted a launch ceremony for its strike task force committee and a union member resolution meeting at 12:20 p.m. Additionally, the Samsung Heavy Industries (SHI) labor union will stage on-site tent protests.
The joint union plans to continue negotiations with management over this year’s wage and collective bargaining agreements both during and after the strike. If no progress is made by September, further strikes are planned, with another already set for Sep 9.
HD HHI’s union is demanding a flat increase in basic pay of 159,800 won (excluding seniority raises), adjustments to performance bonus criteria, higher holiday pay, an extension of the retirement age, and the abolition of the peak wage system. They are also seeking a veto right on promotions to safeguard union members. Despite around 20 rounds of negotiations with management leading up to the day before the strike, significant progress has not been achieved. At Hanwha Ocean, a key sticking point remains the use of restricted stock units (RSUs) as performance bonuses. Last month, the Hanwha Ocean Union staged a seven-hour strike at the Geoje shipyard due to unresolved issues.
According to Clarksons Research, a British shipbuilding and maritime market analysis firm, the “Newbuilding Price Index” for the last week of July was 187.23, up 10% from the same period last year. This figure is nearing the peak of 191.6 recorded in September 2008, during the industry’s most prosperous period.
The industry’s resurgence has led to a recovery for domestic shipbuilders since last year. HD HHI, which reported losses exceeding 1 trillion won (about $748.5 million) in both 2021 and 2022, turned a profit last year with earnings of 178.6 billion won ($133.68 million). Hanwha Ocean, which had accumulated an operating loss of about 3 trillion won ($2.24 billion) from 2021 through last year, posted an operating profit of 43 billion won ($32.18 million) in the first half of this year. SHI also returned to profitability last year.
There is concern in the industry that if the strike escalates, it could disrupt production and delay delivery schedules. An industry insider noted, “If the strike continues for an extended period, there is a risk that this year’s scheduled ship deliveries could be delayed, potentially harming our reputation.”
