Investor That Can See The Future

Chapter 154

A company is not just for the president and shareholders. The workers who work there are also part of the company.

Workers have the right to form unions, bargain collectively and strike if demands are not met.

When Carlos acquired Chrysler, it contained information about the succession of employment. Therefore, even after the acquisition, we did not make any wage cuts or restructuring.

Ryan said.

“If there is a production disruption, even the remaining sales network will completely collapse.”

In the automobile industry, due to the nature of work performed on a conveyor belt, if workers in charge of one process let go of their work, the entire factory will come to a standstill.

Traditionally, the union is strong as the number of workers is large and the power is strong.

In the past, the U.S. Automobile Workers’ Union (UAW) was notorious for intensively attacking the most profitable companies in the year among the big three American automobiles (GM, Ford, and Chrysler) to receive maximum wage increases and various benefits.

However, the increase in wages does not mean that productivity has increased. As the high-cost, low-efficiency structure became fixed, it soon led to a weakening of the competitiveness of American automobiles.

However, this situation, which seemed favorable to the workers, did not last long.

When the 2008 financial crisis broke out, the big three automobiles collapsed all at once.

GM, the eldest of the Big Three, closed 17 of 47 factories in the US and laid off a third of its production workers.

The automobile industry has the largest employment-inducing effect among manufacturing industries, and has a large impact on the economy as well.

The government implemented a bailout and demanded concessions from the union, and the American Automobile Union agreed to freeze wages, suspend strikes, and give up bonuses and various welfare benefits.

Although it was late, he realized the natural truth that only when the company survives, so do the workers.

After that, they actively agreed to the transitional arrangement and re-education to increase productivity. The annual wage and collective bargaining agreements (wages and collective bargaining) were changed to once every four years, allowing American automakers to establish long-term management plans stably.

As productivity improved, GM doubled U.S. production and hired more workers instead of building a plant abroad.

But even though they belonged to the same big three, Chrysler’s situation was not very good. So the FCA Group hastily started selling it. Sadly, things got worse after we took over.

The reason is that sales volume plummeted after refusing dealers’ requests to raise margins.

“Some production lines have stopped, and workers are feeling job insecurity. There is also great dissatisfaction with the reduction in bonuses due to the disappearance of overtime and overtime.

I sighed and said.

“Last time the dealer was the problem, but this time the union is the problem.”

In fact, the automobile industry is where all the problems of manufacturing are intertwined. That way no one can jump in.

I picked up the papers on the desk. It contained the demands of the union. I’ve seen it a few times before coming here, but looked again.

“A 6.8 percent wage increase, a ban on layoffs for the next 10 years, an extension of the retirement age, normalization of production lines… … So far, it makes sense.”

However, the requirements below are speculative.

Distribution of company stock equivalent to US$30,000 per union member, distribution of 30% of net profit in case of a surplus, participation of union members in company management, union consent when relocating production lines, and union consent when allocating production to new factories

When I first saw this request, I wondered where I saw it a lot… … .

“I think I learned from seeing the Eunseongcha union.”

Although the global auto union is strong, it is not comparable to the Eunsung Motors union (only in Korea).

The Eunsung Tea union in Korea became famous around the world by holding a general strike every year as if it were an annual event. Even the Park Si-hyeong government, which promotes anti-union and pro-business policies, has not touched a single hair of the Eunseong-cha union.

Just looking at the requirements they put out to the company every year is shocking.

Basic salary increase, distribution of 30% of net profit, bonus increase, severance pay increase, retirement age extension, preferential treatment for long-term employees, full support for admission and tuition fees for children who are employed, consultation with labor unions for new hires, consultation with unions for new overseas factories, introduction and production of vehicles Consultation with the labor union for distribution of quantities, consultation with the labor union for production line conversion arrangement, priority hiring of children of long-term employees, etc.

At this point, people are confused about whether they are workers or managers.

The union argued that it was a natural measure to improve low wages and poor working conditions, but the demand included priority hiring of children of long-term employees.

If the parents are the Eunsung Motors union, they are asking for permission to work at Eunsung Motors for generations.

Although public opinion criticized that it is no different from the modern version of the umseo system, the Eunseong Tea union did not blink an eye.

A labor union is an organization that aims to maximize the profits of the workers who are members of the union. For this reason, the Eunsung car union only needs to take care of their share, and there is no need to worry about public opinion.

The problem is that the livelihoods of many subcontractors depend on Eunsung Car.

The moment the production line stops due to a strike by the Eunsung Motors union, the factories of the primary, secondary and tertiary suppliers also stop all at once.

It is even said that if Eunseong Cha coughs, the partner company will contract pneumonia.

For this reason, when Eunseong-cha’s collective bargaining season came, the bosses and workers of the subcontractors prayed earnestly that the union would not go on strike.

However, the Eunseong-cha union went on strike every year without a break.

This is possible because Eunsung Motors has effectively established a monopoly system in Korea. The management knows that no matter what they do, the company won’t go bankrupt, and the workers know it too.

As long as the car is made and sold, it is not shaken by external variables such as the financial crisis and can go on strike without any burden.

With strikes so frequent, how did Eunseong Cha grow?

The answer lies in overseas factories. If only Korea had operated the factory, it would have gone bankrupt sooner.

Eunsungcha’s management company mostly accepted the union’s demands. Instead, no more factories were built in Korea. Meanwhile, it has continuously increased its overseas plants in Mexico, Brazil, Russia, Czech Republic, Turkey, India, China and Slovakia.

This is not just the silver car.

The fact that the Korean Automobile Union is strong was already known around the world, and other automakers were also reluctant to build factories in Korea.

After the last factory built by GM Daehoo in Gunsan in 1997, there were no new automobile factories in Korea.

Naturally, domestic production has stagnated. In spite of the word “automobile power”, it fell to 6th place a while ago by India, and is expected to be pushed to Mexico soon.

It is right to engage in negotiations with the union with sincerity and to comply with fair demands. But once you start dragging around, there is no answer.

“The first round of negotiations is in three days.”

I nodded.

“I will meet the union members in person. Until then, we will think about a deal.”

* * *

The meeting continued without a moment to catch a breath as there was not much time left until the negotiations.

I wrote three words on the whiteboard.

?R&D

A car is the second biggest asset after a house. As it is purchased through installments or leases rather than all cash, the sales are inevitably related to financial companies. Here, inventory and supply and demand must be professionally managed in consideration of consumer tastes and demands.

It is the dealer who plays this role.

Dealers around the world sell vehicles to local consumers through consignment or direct purchase (only Nikola sells vehicles directly through the website without going through a dealer).

“The problem is production… … .”

R&D is carried out by the head office, and sales are carried out by dealers. It is, of course, the factory responsible for the production.

In the past, it was natural to have a factory in the country where the headquarters is located. GM in the US, Toyota in Japan, Volkswagen in Germany, and Eunsung in Korea.

However, as the world has become global, automakers have built factories in many countries.

In the case of GM, some of the cars produced at its US factories are exported to Korea, and some of the cars manufactured at its Korean factories are exported to the US.

It doesn’t matter where you produce it, as long as it’s efficient. Just as Mexico is the 7th largest automobile producer in the world, without a single rising car brand.

Factories that are less productive are closed at any time. Not long ago, GM closed its Holden plant in Australia.

However, this does not mean that it has withdrawn from the Australian market. The Holden brand is sold as it is, but the quantity produced at the Australian factory is produced and exported at a factory in another country.

Sales compete with other car brands, while production competes with local factories.

In other words, the US plant and the Korean plant, which belong to the same GM, are actually competing for production volume. If it is judged that the productivity of the Korean plant is declining, the Korean plant will be closed at any time as in the case of Australia and the supply will be transferred to other regions.

“The area where Karos has the greatest strength is research and development, not production or sales.”

We have the best autonomous driving technology compared to our competitors. And it plans to launch and produce a new car equipped with it.

From a calculation point of view, there is limited financial capacity until the launch of a new car. If the funds run out, OTK Company will have to provide support again.

The problem is that OTK Company also bought Seoseong SB stock and did not have much money left to build the TS Company factory.

If production is disrupted, what should be done?

* * *

The first round of negotiations took place in a conference room at the Detroit plant.

We came to the negotiating table first and waited. After a while, the door opened and people entered. I was surprised to see the first person to come in.

He was a bald, middle-aged man with a thick mustache and beard. He was almost two meters tall. No, he wasn’t two meters tall, he was definitely over two meters tall.

He’s about two meters and twenty centimeters tall?

He was bloated, but he was so big that he didn’t feel fat. The forearms exposed under his sleeves were thicker than my thighs.

The bald head shining in the light felt menacing.

I thought Sangyeop also looked like a bear, but compared to this guy, he’s a teddy bear.

What the hell is this guy?

Is he a professional wrestler who was put in to suppress the management side by force?

“This is Union Chairman Dennis Bullock.”(Read more @ wuxiax.com)

“Oh, yes.”

You were the union president. He almost made some misunderstanding. It kind of looks like a big show.

It didn’t end here. Then a black man who looked like The Rock and a white man who looked like Brook Lesnar came in and stood beside him.

Are union members selected for professional wrestling?

Looking at the physicality of American workers, I suddenly want to miss Korea.

Dennis looked at Ellie standing next to me and said,

“Did you bring your lover to this place?”

“that… … .”

It is true that she is a lover.

Ellie smiled brightly as if nothing was wrong and greeted her.

“nice to meet you. My name is Attorney Eli Kim.”

He had a puzzled expression on his face as he didn’t think such a beautiful woman would be a lawyer.

“Hmm, nice to meet you.”

Thanks to Ellie, I was able to find some coolness. Should I be right that the negotiation doesn’t go well?

But one hit can kill you… … .

“This is Jinhoo Kang, the CEO of OTK Company. nice to meet you.”

The union members looked at me with unique eyes. It seems surprising that I came to this place in person.

We greeted each other and sat down.

First, Carlos CEO Daryl spoke up.

“We have taken a good look at the union’s demands. It is impossible for the management to accept all of those demands.”

Dennis then wiggled his eyebrows.

“If the demand is not met, we have no choice but to go on strike.”

In order to strike, a two-thirds majority of the members must vote in favor of it. Given the current situation, the likelihood of a resolution is quite high.

I nodded.

“Then do it.”

The union members’ eyes turned to me all at once.

I looked at them and spoke.

“I respect the rights of all workers. There will be no lockouts or layoffs if there is a strike. Your salary will be the same. So whether you work for a paycheck or go on strike, I will leave it to you.”