I headed to a Japanese restaurant in the basement of the Ceylon Hotel with Taek-gyu. Han Chan-young, who had arrived earlier, stood up from his seat to greet us.
“Long time no see.”
Our first and last meeting was during the X-Cop bidding. This is our second time seeing each other.
In the meantime, a lot has changed for both of us. CarOS has become a global company, while Eunsung Motors is going through some tough times.
He’s probably under immense pressure from shareholders even now.
One of the common problems among Korean conglomerates is their weak control over management. Like any other conglomerate, the Han Chan-young family’s stake is less than 5 percent. Trying to dominate the entire group with such a small stake inevitably leads to various loopholes, including circular investments.
In normal circumstances, it might not seem like a problem, but when the company’s situation worsens or the ownership structure changes due to management succession, these vulnerabilities are exposed.
A plate of croaker sashimi was placed on the table.
“What made you want to meet?” I asked.
He replied with a heavy expression, “I would like to ask for your help, CEO Kang Jin-hoo.”
I knew he wouldn’t just ask to meet for a meal. But Taek-gyu is already diligently using his chopsticks.
“What kind of help specifically?”
“I would like to receive OTK batteries.”
“Large batteries for vehicles aren’t out yet, though.”
“I heard that battery pack development is almost complete. Won’t production be starting soon at Seosung SB’s Suwon plant?”
“You’re well-informed.”
We had already changed part of the production line.
Taek-gyu, while gobbling up the sashimi, asked, “What about hydrogen cars?”
Han Chan-young gave a bitter smile.
Eunsung Motors’ ambitious hydrogen car project had been completely halted.
Hydrogen cars certainly have advantages over electric cars in terms of charging time and driving range. So, the era of hydrogen cars might come someday.
However, no matter how good the technology, it’s useless if the timing isn’t right. What good would the hydrogen car era be if Eunsung Motors collapses before then?
Now, with OTK batteries, that possibility has disappeared, and automakers who were in the hydrogen car camp have already pulled out.
Instead of answering, I brought up another topic.
“These days, everyone seems to be forming alliances. You must have had quite a few offers, right?”
Even though sales plummeted, Eunsung Motors is still among the top five automakers in the world. There must have been many offers from various places.
But why did he specifically come to me?
“It’s not that there haven’t been any. But if we’re going to join hands, isn’t it better to partner with the number one company?”
If I refuse, he will probably join hands with someone else, regardless of who.
“Shouldn’t you resolve the strike first?”
Han Chan-young nodded.
“We plan to reach a conclusion soon.”
Despite the company being in crisis, the union is pushing hard. And if the company gets out of this crisis, they will demand even more.
“Even if you somehow get through this year, the same thing will repeat next year.”
Compared to other manufacturers, Eunsung Motors’ production workers’ wages are exceptionally high. This is also the case compared to competitors like GM, BMW, and Toyota.
How did Eunsung Motors end up with such a high-cost structure?
Firstly, because they were still making profits. The company isn’t stupid either. As regular employee wages rose, they minimized hiring regular employees and filled those positions with non-regular workers. Also, they stopped building factories domestically and continued to increase overseas factories as a response.
After all, the union only cared about raising regular employee wages, and had no reason to take care of non-regular workers who weren’t union members.
An even bigger reason is the shareholders’ backlash. Which shareholder would just stand by and watch the stock price plummet due to strikes?
Han Chan-young asked, his eyes gleaming, “Do you have a good solution?”
“Well, even if the damage is significant in the short term, it might be necessary to resolve it this time.”
After finishing our meeting with Han Chan-young, we went straight to Golden Gate.
Hyun-joo noona was working while drinking coffee. Taek-gyu asked, surprised,
“Oh! Noona, are you allowed to drink coffee?”
“It’s decaf.”
“Is decaf okay?”
“One or two cups a day is fine.”
Hyun-joo noona stopped what she was doing and stood up. When she was sitting, it wasn’t as noticeable, but seeing her like this, I could definitely tell her belly was showing.
“Where have you been?”
“I met with Han Chan-young.”
At my words, Noona was taken aback.
“The chairman of Eunsung Motors? What for?”
“They asked to meet.”
I briefly explained the conversation we had.
“We need to adjust the conditions a bit, and I think Noona needs to help us.”
Hyun-joo noona looked at me with a puzzled expression.
“You didn’t seem to want to bother with Eunsung Motors, what changed your mind?”
It’s because I saw the future…
“Well, business is business, after all. Chairman Im Jin-yong thinks the same way.”
And it feels like we might acquire them later anyway.
Taek-gyu nodded vigorously.
“Right, right.”
“We’ll assign Team Leader Seo Sang-won and his team from our side. You can gather other personnel and just give instructions, Noona.”
“If it’s not Noona, who else would we trust?”
Hyun-joo noona chuckled, as if she couldn’t help it.
“And here I was, being told to rest for the baby, and you’re already creating more work.”
Most CEOs avoid directly mentioning labor-management issues, as it can negatively affect negotiations.
However, the day before the second round of negotiations, Chairman Han Chan-young directly addressed the media and announced the company’s position.
“Eunsung Motors is currently facing various difficulties and is in the process of overcoming them. Due to the worsening business situation, further wage increases are impossible. Above all, codifying preferential hiring for union members’ children is unacceptable because it deprives fair employment opportunities and can worsen the employment structure. The company hopes for negotiations with the union at a reasonable level.”
As soon as the statement was released, the Eunsung Motors union vehemently protested, and negotiations broke down before they even sat down at the table.
The union immediately held a strike vote, which passed with an overwhelming 92 percent approval rate.
Union leader Ju Seong-mu shouted in an enraged voice, “Unless Chairman Han Chan-young, who ignored the union’s legitimate demands, comes and apologizes in person, there will absolutely be no strike withdrawal!”
A full-scale strike began, and all conveyor belts in domestic factories came to a halt.
The political world unanimously urged the resumption of negotiations. However, the company did not back down, and neither did the union.
Fearing the deployment of replacement workers, the union occupied the factory.
Nevertheless, the company took no action. They did not deploy replacement workers, nor did they take extreme measures like factory closures.
A week passed in that state.
Even if a factory stops for just one day, the company incurs enormous losses. The losses were already snowballing.
When a finished vehicle factory stops, all the factories of its suppliers also stop. It doesn’t end there. The commercial districts in the factory areas are virtually dependent on Eunsung Motors. Stores, including restaurants, also all went into temporary closure.
Even the display vehicles in dealerships were sold, and there were no more cars left to sell. Foreign factories were operating normally and had sufficient inventory, but according to labor-management agreements, these volumes could not be brought into the country.
As deliveries were delayed, complaints from customers who had signed contracts erupted. There was no guarantee of when they would receive their cars. Tired of waiting, customers canceled their contracts and looked for cars from other companies or turned to the used car market.
The used car market experienced an unexpected boom. Used car dealers quickly raised prices for popular models.
Eunsung Motors’ crisis is a good opportunity for competitors to increase their market share in Korea.
GM and Renault, which have factories in Korea, operated their factories at maximum capacity and poured out volume, while import car dealerships contacted their headquarters and tried to increase import volumes.
Union leader Ju Seong-mu was flustered.
By now, even if they weren’t waving a white flag, there should have been talk of wanting to negotiate. But the company showed no movement at all.
He calmed the wavering union members.
“If we just wait a little longer, the company will eventually have no choice but to give in. If we hold out just a bit more, we will definitely win!”
Although profits are not announced separately by country, it is well known that Eunsung Motors’ profit margin in Korea is overwhelmingly higher than overseas.
This is due to domestic price discrimination, which makes car prices expensive, but also because the sales network and logistics are well-established, and brand recognition and preference are high, reducing the need for marketing expenses.
However, as the strike prolonged and domestic sales virtually stopped, the already plummeting stock price fell again.
Shareholders rose up in anger. Both institutional and small shareholders criticized the management.
If Han Min-goo had been there, the situation might have been a little better. He was the one who led the Korean economy and made Eunsung Motors a global company. But Han Chan-young has not yet played any significant role.
At a time when skeptical eyes were being cast on the new CEO’s management capabilities, the problem of a full-scale strike erupted.
Han Chan-young went around personally to persuade major shareholders to appease them.
And I announced OTK Battery’s mass production plan along with future investment plans to the media.
“CarOS, in cooperation with Seosung Group and several other companies, is planning to create battery and electric vehicle production complexes in the Asian region. We are currently reviewing several countries as candidate sites.”
Then reporters quickly threw questions.
“Where are the leading candidate sites?”
“Does that include Korea?”
“Do you have any investment intentions in Korea?”
I said definitively, “The Korean automotive industry has too much risk due to its high-cost structure and frequent strikes. No one in their right mind would look at the current situation at Eunsung Motors and invest in Korea.”
– What? Did Kang Jin-hoo just blatantly diss the union again?
– WTF, what’s Kang Jin-hoo trying to do?
– What’s wrong with the union?
– Kang Jin-hoo is hanging out with the chaebols and has become just like them.
– What are you talking about? Kang Jin-hoo helped the Woosong Enterprise union and put that company’s president in jail.
– But why is he being like this to the Eunsung Motors union?
– Are the Woosong Enterprise union and the Eunsung Motors union the same? There’s as much difference as between commoners and nobles.
– Kang Jin-hoo is taking the company’s side and is at the forefront of union-busting. The Eunsung Motors union will fight to the end for the benefit of all workers!
– Isn’t it just for the benefit of the Eunsung Motors union? Why are they dragging other workers into their fight?
– Are you not thinking about the workers at the suppliers who are dying because of your strike?
– Non-regular workers who worked at the factory are about to starve!
– You get paid that much and work, isn’t asking to get your kids hired too much?
– If children are hired at the company where their father has worked for a long time, wouldn’t they work with even more company loyalty? It’s not like we’re asking for unconditional hiring, but preferential hiring if they are qualified. This is also beneficial to the company.
– Is this even words, or just dogshit?
– Some top-tier dogshit right there.
– So, because the union is full of company loyalty, they are striking? Just declare that you’ll be striking for generations.
– Aren’t you even thinking about the 15+ years of sacrifice to the company?
– Listening to you, you’d think Eunsung Motors dragged you in and made you do forced labor without paying a penny. You willingly entered the company and worked while getting paid, what sacrifice?
– Han Min-goo also passed down the chairmanship to his son, why are you only criticizing the union! What did we do wrong?
– That’s why chaebols get criticized. You’re doing the same thing, so you’re getting criticized too.
– LOL, according to the Eunsung Motors union’s logic, the president right now should be Park Si-hyung’s son.
– And lawmakers should also elect their children as proportional representatives.
– Yeah, yeah. Lawmakers probably think they sacrificed for the country too, so at least do that much for them.
Looking at the internet, Taek-gyu patted my shoulder and said,
“The internet is overflowing with hate for you again today.”
“……”
That’s why I don’t look at comments.
At this point, I wonder if there’s anyone in Korea who gets as much hate as I do. It almost feels like I’m buying hate on purpose.
My remarks caused not only the Eunsung Motors union but also the Metal Workers’ Union to rise up. (The Eunsung Motors union is under the Metal Workers’ Union, not an independent union.)
The Metal Workers’ Union issued a statement demanding a halt to union-busting activities and announced a rally in Seoul. Fortunately, unlike the Parent Federation, they weren’t completely unreasonable and obtained official permission for the demonstration.
You shouldn’t underestimate the physical strength of workers who have worked in factories for over ten years. Looking at videos of clashes with the police, even energetic conscripted policemen in their twenties were falling like flies.
Fortunately, unlike in the past, physical clashes like that are rare these days.
“Is it okay to protest in front of the company?”
“The Republic of Korea is a country with freedom of assembly and demonstration, isn’t it?”
I do respect things like that.
But regardless, they are saying they’re going to protest in front of the company, I can’t just stand idly by.
I gave instructions to the staff.
“Starting tomorrow, until the protest ends, everyone work from home and don’t come to the office.”
