Seoul: For the first time since its establishment in 1953, Hyundai Steel has initiated a partial lockout at its cold rolling mill in Dangjin, South Chungcheong. The decision comes amid ongoing conflicts with its labor union over wage and collective bargaining agreements, resulting in the suspension of high-value-added cold-rolled steel sheet production, which is crucial for automobiles and home appliances. This marks the first large-scale lockout in Korea since Mando, an auto parts manufacturer, implemented one in 2012.
According to Yonhap News Agency, the Labor Union Act gives employers the right to lockouts, just as it gives unions the right to strike. During a lockout, employees do not receive wages and are barred from entering the workplace. Hyundai Steel and its union have conducted 22 rounds of negotiations since last September but have failed to resolve their differences over performance-based bonuses. The union, affiliated with the Korean Confederation of Trade Unions' Metal Workers' Union, has demanded the highest-ever bonus payout and has staged both full-scale and partial strikes since last month. As of this month, strike-related losses have reportedly reached 25.4 billion won ($19 million).
The steel industry faces immense pressure from both domestic and international challenges. Korean steelmakers must compete with low-cost Chinese imports and the potential threat of a 25 percent tariff from the second Trump administration. Hyundai Steel's consolidated operating profit last year shrank by 60 percent year-on-year to 314.4 billion won, primarily due to the downturn in the steel industry. If additional performance bonuses are factored in, nearly half of last year's operating profit could be wiped out. To counter tariff barriers, Hyundai Steel is considering building a steel plant in the United States, a project that may require an investment of up to 10 trillion won. However, expanding overseas could result in fewer jobs remaining in Korea.
Despite these challenges, Hyundai Steel's union rejected the company's offer of a 26.5 million won bonus per employee, demanding a payout similar to those received by Hyundai Motor and Kia, which achieved record-breaking profits last year. The union's demands are seen as reckless, given the precarious state of its own jobs. In contrast, the United Auto Workers (UAW), the largest automobile industry union in the United States, has openly welcomed Trump's proposed tariffs. Instead of opposing tariffs that could threaten their own employment, Korea's steel unions are engaged in a self-destructive struggle, further weakening the government's bargaining position.
Hyundai Steel CEO Seo Kang-hyun issued a statement urging the union and management to come together to overcome these dire challenges and withdraw the strike. Meanwhile, the Bank of Korea's Monetary Policy Board cut the benchmark interest rate by 0.25 percentage points, as expected, and lowered the country's GDP growth forecast for this year from 1.9 percent to 1.5 percent. While macroeconomic policies aim to boost the economy, they alone are insufficient. For a true economic recovery, union behavior must change. If entrenched unions continue opposing necessary reforms, there is little hope for Korea's economy.