As the labor and management of Renault Samsung Motors have failed to reach a tentative agreement on wage and collective agreement negotiations in 2018, it has become practically difficult to secure new export quantity. If the situation is not solved easily, there are concerns that the company could follow the same path of GM Korea, such as restructuring and reducing manpower.
There are concerns that if it failed to secure export quantity until the coming September when its production of Nissan Rogue ends, the factory operating rate will be halved and restructuring will be considered.
According to Renault Samsung on March 9, the management and the labor engaged in intensive negotiations from 2 p.m. to midnight on March 8, but they failed to reach an agreement. The Renault headquarters has set a deadline for ending the negotiations between the labor and management on March 8.
Its Busan plant will end the Nissan Rogue consignment production contract in September, which currently accounts for 48 percent of its total output. "As the agreement between the labor and management has not been reached in the end, the sustainability of the plant in Busan is expected to be at a critical juncture," a Renault Samsung official said.
The reason why Renault Samsung is having difficulties in getting the follow-up Rogue quantity is because its competitive edge is lower than that of other alliances' factories due to rising fixed costs such as labor costs.
According to the management, the average salary of employees at the Busan plant rose by 2-3 percent annually to 78 million won as of 2017, up 20 percent from five years ago.
Another bad news is that Renault Samsung is suffering from a slump in domestic demand. The company`s domestic sales last month fell by 8.0 percent year-on-year and 4.9 percent month-on-month. Last year, sales also dropped by 10.1 percent to 90,369 units from a year earlier.