IWSF – Ch 255

Eunsung Motors is experiencing its worst crisis since the IMF.

The airbag recall fiasco, plummeting sales and operating profits, doubts about Han Chan-young’s management capabilities, a full-scale union strike, and so on.

Worst of all, one of the biggest hurdles is my own bad history with Eunsung Motors.

I did offer some help during the airbag recall, but I was the one who caused the whole mess in the first place. Some people even suggested that Caros was targeting Eunsung Motors for a hostile takeover.

Well, it’s not like I hadn’t considered it…

In any case, these combined concerns kept dragging down Eunsung Motors’ stock price. The Eunsung Motors stock forum was overflowing with complaints from retail investors.

– You bastards. Aren’t you managing the stock price?

– Screw you Han Chan-young and the union, I hope you all die.

– Just shut it all down and delist.

– I’m a moron for buying Eunsung Motors stock.

– I love you so much, honey. I’ll do better ㅜㅜ

– To the wives of the pathetic husbands who invested in Eunsung Motors stock, I’m sorry!!!

– Please do something!

– Han River, let’s go! (implying suicide due to financial ruin)

Institutions, foreign investors, and individual investors all dumped their shares, while we quietly and steadily bought them up on the market.

OTK Company bought up exactly 4.97 percent. We stopped there because we’d have to make a public disclosure if we went over 5 percent.

Golden Gate Korea also purchased 4.9 percent. OTK Company plans to acquire this stake later through a block deal.

And finally, negotiations with Eunsung Motors were concluded.

Hyunjoo noona announced the results of the negotiations at a meeting she called.

“Based on yesterday’s closing price, OTK Company will acquire 9 percent of treasury shares held by Eunsung Motors, and Caros will sequentially purchase 8 trillion won worth of BWs. Combined with the 18 percent stake we currently hold, and additional market purchases and new share acquisitions, we can raise our stake to 40 percent.”

BW stands for Bond with Warrant, a type of convertible bond. Like a regular bond, you can receive the principal and interest at maturity, or you can choose to convert it into new shares instead of receiving cash. However, the interest rate is much lower than on ordinary bonds.

The reason we deliberately chose this method was due to Eunsung Motors’ financial situation. Eunsung Motors had already spent a lot on the airbag recall and strikes, leaving them with insufficient funds for large-scale investments.

Since this deal is all about securing OTK Company’s cooperation, existing shareholders aren’t likely to oppose the BW issuance. In fact, they’ll probably cheer.

As the buyer of the BW, we can only profit more if Eunsung Motors’ stock price goes up, so we have every reason to help them succeed.

Of course, we’re asking for something in return.

“Prioritizing Eunsung Motors among all automakers as our primary partner, preferential supply of autonomous driving modules, preferential supply of OTK batteries, and guaranteeing certain business rights in Asia and Eastern Europe, and so on.”

Eunsung Motors’ existing infrastructure is considerable. Most importantly, their production capacity of nearly ten million vehicles annually is a huge asset.

Equity stake aside, the more cars equipped with our self-driving software and OTK batteries they produce, the more our profits will grow.

The CEOs of OTK Company, Seosung Group, and Eunsung Motors Group gathered at the Ceylon Hotel Convention Center and signed the agreement.

Chairman Han Chan-young announced to the press, “This partnership will allow Eunsung Motors to reinvent itself as a leader in the future automotive market.”

As soon as the news broke, Seosung Electronics and Seosung SB shares jumped almost 5 percent, and Eunsung Motors’ stock price immediately hit its daily limit.

Retail investors, who had been cursing up a storm on the forums just moments before, erupted in cheers. Though most acknowledged they were still a long way from recouping their losses.

Taekgyu said, reading the article, “Wow! Good reaction. People are actually praising Kang Jin-hoo for finally doing something good.”

That’s how desperate everyone is for jobs.

I chuckled. “But I doubt the Eunsung Motors union will see it that way.”

***

Korean auto unions had long looked up to the Eunsung Motors union as a role model in their struggles. But suddenly, citing worsening financial conditions, GM closed its Gunsan plant.

Following the collapse of Eunsung Heavy Industries, GM’s factory closure dealt a direct blow to the Gunsan regional economy.

Noh Hyung-joon, who once worked as a non-regular worker at the GM factory, walked past the darkened storefronts. He’d already gone to dozens of interviews, but finding a job was like trying to pluck a star from the sky.

‘What did I do wrong?’

Rumors circulated that GM might completely withdraw from the Korean market. It was certainly possible; GM had a history of doing just that.

Like auto unions in every country, the Australian auto union was also militant. When Australian government subsidies dried up, GM showed signs of closing its factories. The union, which had been striking and fighting fiercely until then, finally agreed to wage and benefit cuts and promised not to strike, but it was too late. GM pulled out without hesitation. And just like that, Australia’s last auto factory disappeared, leaving all its workers unemployed.

‘All I did was work my butt off for wages that weren’t even 30 percent of what regular employees earned.’

Even so, regular employees were better off. They received substantial severance pay and either took early retirement or transferred to other factories. But non-regular workers were left with nowhere to go. All they received was a paltry 10 million won consolation payment and some unemployment benefits.

‘We didn’t even strike.’

After all, even if they had striked, it would only have improved the wages and benefits of regular employees, not really affecting non-regular workers. Yet, they suffered the most damage.

It was unfair, but there was nowhere to complain. Because they were non-regular workers.

The studio apartments that were once packed with people who worked at the factory were now empty. Even offering to let people move in and only pay management fees didn’t attract anyone. The building owner, unable to bear it any longer, put the building on the market for less than the construction cost, but no one even came to look at it.

Noh Hyung-joon met a friend for lunch for the first time in a while. The once-bustling barbecue restaurant was empty.

The regular restaurant owner greeted her first lunch customers with a weak smile.

The two put meat on the grill and clinked soju glasses.

“How’s work?”

“Just barely hanging on. After all the deductions, I barely clear 1.5 million won a month.”

“Still, you’re lucky to have found a job.”

“How much longer will it last? I’m non-regular anyway.”

Even though he said that, he was grateful to have even this job now. It wasn’t like he was the only one out of work.

“Even with things like this, the Eunsung Motors union is on a full-scale strike. Has it been almost a month?”

“Eunsung Motors’ situation is serious these days.”

“Looks like they didn’t learn anything from seeing this factory closed.”

Noh Hyung-joon sighed. “It’s not like Eunsung Motors’ domestic factories will collapse, though.”

For GM, headquartered in the US and focused on the American market, Korea or Australia were expendable. But Eunsung Motors is a Korean company and heavily dependent on the Korean market. They wouldn’t be able to close factories no matter what. The union knows this fact well, which is why they’re pushing the company to the brink with their strike.

“What are you going to do?”

“I don’t know.”

He was born and raised in Gunsan. His family and friends were all here. He didn’t want to leave the city, but he was running out of options.

But even if he went somewhere else, there was no guarantee he’d find a job. It was a frustrating situation all around.

His friend, sipping soju, stared blankly at something.

“What’s wrong?”

Then, his friend shouted to the restaurant owner, “Auntie! Can you turn up the volume!”

Emergency breaking news was flashing on TV. Kang Jin-hoo was on the screen, and the caption below read ‘OTK Company, Seosung Group, Eunsung Motors Group Business Agreement’.

Kang Jin-hoo announced to the camera, “OTK Company has decided to make Eunsung Motors Group our strategic partner in the Asian market. We will cooperate in the fields of autonomous driving and electric vehicles moving forward, and OTK batteries will also be prioritized for supply. Furthermore, we have agreed to include Eunsung Motors in the electric vehicle industrial complex investment plan we are pursuing with Seosung Group, and to build an industrial complex with an annual production capacity of 200,000 vehicles domestically.”

The two forgot about the meat burning on the grill and just stared blankly at the TV.

Kang Jin-hoo continued to explain the investment plan. They planned to produce at least 200,000 electric vehicles annually, and the number of employees would be a staggering 15,000.

That was just the direct employment within the industrial complex. Considering the impact on related industries and the local commercial district, it was safe to say that two or three times that many jobs would be created.

This was akin to creating an entirely new city from scratch!

The following announcement was even more shocking.

“We plan to apply a wage solidarity system within the industrial complex, and the base salary will be set at 36 million won for entry-level positions. This will be applied equally not only to large corporate factories but also to subcontractor factories. Bonuses and performance-based pay will be paid separately, so the average wage is expected to be over 40 million won. If production increases, we will strive to create more jobs by hiring more regular employees rather than increasing overtime and special work hours.”

His friend muttered as if to himself, “If that comes to Korea, where is the most likely place?”

Noh Hyung-joon shouted as if it was obvious, “It’s gotta be here!”

He thought so not just because he was from Gunsan, but because there was the closed GM factory here, and also the suppliers that used to supply to it.

And a significant number of employees who used to work at the factory were still left here. These people could be put into the field immediately without much additional job training.

In other words, they could build the industrial complex here the fastest compared to other regions.

The restaurant owner jumped up and raised both arms in the air. “We’re saved! We’re saved!”

***

After the article was published, the entire city of Gunsan was buzzing.

People who were about to leave to find jobs stopped in their tracks, and self-employed business owners who were about to close their doors postponed their closures. And studio apartment and building owners quickly withdrew the properties they had put on the market for rock-bottom prices.

Civil complaints poured into Gunsan City Hall and Jeollabuk-do Provincial Office. They had to attract the electric vehicle industrial complex no matter what.

Chemical plants, which were feared to emit harmful substances, and cement factories, which released dust, were undesirable. However, automobile factories, which emitted less harmful substances and had a high job creation effect, were welcomed everywhere. There were concerns about battery factories, but Seosung Corporation, which was in charge of building the industrial complex, publicly announced that they would create a state-of-the-art, eco-friendly industrial complex.

The Mayor of Gunsan and the Governor of Jeollabuk-do rushed to Seoul to meet with Representative Kang Jin-hoo, Chairman Im Jin-yong, and Chairman Han Chan-young.

Korea Development Bank, the second-largest shareholder of GM Korea, quickly expressed its intention to review the sale of the factory and equity participation.

Other regions were not just sitting idly by either.

Even metropolitan cities were struggling due to the weakening of manufacturing competitiveness. Young people were leaving for Seoul and the metropolitan area in search of jobs, and the cities lost their vitality.

As the local economy deteriorated, taxes were not collected well, and local governments, lacking funds, could not properly invest in infrastructure and various support programs. This in turn led to a vicious cycle of young people leaving the city again.

The only way to break this vicious cycle was quality jobs.

If there were good jobs, people could be drawn in. If people gathered, the local economy and commercial district would be revitalized, and local governments could build various cultural facilities and infrastructure.

– Entry-level 36 million won, sweet.

– They say average annual salary including bonuses and stuff will be around 40 million.

– Freaking awesome. I don’t know about Seoul, but in the provinces, this kind of salary is totally arigato. (thank you in Japanese, used sarcastically to mean great)

– lol, amazing that even giving this much is still less than half the average annual salary of the Eunsung Motors union.

– If you just hire me, I’ll work my life away! I’ll work twice as hard as the Eunsung Motors union!

– Representative Kang Jin-hoo! Please build the industrial complex in Gunsan. Please.

– What are you talking about? Gwangju is the most optimized place for the industrial complex. It’s the wish of all local residents. We’ll pave the road clean for Representative Kang Jin-hoo to come down comfortably.

– How about Busan? Considering exports, isn’t Busan the best? Man, if you just build the factory, I’ll show you for sure what Busan ssanai (tough guy) spirit is!

Mayors of Gwangju, Daegu, Busan, Governors of Chungcheongbuk-do, Gangwon-do, local council members, National Assembly members from local districts, and everyone else, were all stepping up to attract the industrial complex.

The Eunsung Motors union, which had been continuing its full-scale strike, was thrown into great shock. Union leaders were bewildered.

“What the heck is going on?”

“Why is Kang Jin-hoo acting like this again?”

“Didn’t this guy say he had no intention of investing in Korea?”

Union leader Joo Seong-mu felt like he’d been hit hard in the back of the head.

‘What… what does this even mean?’