Hyosung Heavy Industries Office Union Starts a 72-Hour Strike

The first office and technical staff union in the history of Hyosung Heavy Industries, a South Korean maker of power equipment, began a 72-hour warning strike on Nov. 4. The strike is scheduled to run through Nov. 6. The union wants a 10% increase in base pay, clear rules for paying bonuses and a smaller gap in benefits between job groups. The company says the union walked away from talks before even looking at its wage offer, and that it will respond according to the law and its principles. The company also says its main factory will keep running because production workers are not part of the strike.

The dispute involves a company that makes equipment used to move electricity from power plants to cities, factories and data centers.

Who is Hyosung Heavy Industries?

Hyosung Heavy Industries is part of the Hyosung group, one of South Korea's family-controlled business groups. Its heavy industries division makes power equipment such as transformers and circuit breakers, and the company also runs a construction business. Its main production base is a plant in Changwon, an industrial city on Korea's southeast coast.

A transformer changes the voltage of electricity so that power can travel long distances over the grid and then be stepped down for use in factories and buildings. As utilities upgrade aging grids and technology companies build data centers, demand for this kind of equipment has risen sharply. Local reports say the company's order backlog is at a record level, which helps explain why pay has become a sharp issue.

A new union and its first strike

The company has long had a union for production workers. Office, research and technical staff formed their own union only in June this year, the first such union since the company was founded. It signed up about 900 members within three weeks to become the largest union at the company, and it now has about 1,400 members. In July it was confirmed as the bargaining representative. As the bargaining representative, the office union negotiates on behalf of the unions participating in the bargaining process, including the production workers' union. The agreement's precise coverage depends on its terms.

Bargaining representative: when a company has more than one union, one union is chosen to negotiate with management on behalf of the unions participating in the bargaining process. It is usually the union with the most members.

Talks started on Aug. 21. The union says the two sides met eight times without agreeing on pay raises or bonuses. The company counts six formal bargaining sessions plus separate working-level meetings, so even the number of meetings is disputed.

The union declared that talks had broken down and asked the regional labor commission to mediate. On Nov. 2, the South Gyeongsang Regional Labor Relations Commission ended mediation without a deal. The union obtained the right to strike following the commission's decision, according to reports. Lawful industrial action also requires other applicable legal procedures, including a strike vote. The union announced the 72-hour strike the next day.

Mediation ended: a decision by a labor commission that there is no realistic chance of agreement through its mediation.

What the union wants

The union has three main demands: a 10% raise in base pay, a clear standard for how bonuses are paid, and a smaller gap in benefits between different groups of employees.

Its argument rests on last year's results. The union points out that the company's consolidated operating profit rose 106% from the previous year to 747 billion won, or about $557 million at the Nov. 3 Seoul closing rate of 1,341.0 won per dollar. A 106% rise means profit roughly doubled. The union says that improvement was not properly reflected in wages and bonuses.

The union also says management cut off paid time off for union officials during the talks, and calls the strike a warning about that as well. The union says it will escalate if the company does not present a more forthcoming bargaining proposal after the 72-hour strike.

Paid union time: Korean law allows union officials to spend a limited number of working hours on union duties while still being paid. The total is capped by law.

What the company says

In a statement on Nov. 3, the company rejected the union's claim that it had bargained in bad faith. It said it had held six rounds of talks plus working-level discussions and had put forward a proposal for the collective agreement, but that the union declared a breakdown and applied for mediation without even checking the wage proposal that was scheduled to be presented.

The company questioned whether the union had planned to strike from the start. It said it would not make concessions without principle or give in to one-sided demands under strike pressure, and that it would respond according to the law and its principles.

On paid union time, the company said this was not union-busting. It explained that adding hours for the new union on top of the hours already given to the production workers' union could exceed the legal limit, and that a temporary support period for the new union had ended.

The company also stressed that the strike is limited to the office and technical staff union. Production workers at the plant are not on strike, so it says it plans to continue normal production and customer service at Changwon.

What to watch next

The first thing to watch is whether the company makes a new wage offer after the strike ends on Nov. 6. The second is whether the union follows through on its threat to escalate if no more forthcoming proposal arrives. The third is whether non-pay issues, such as paid union time, become a sticking point of their own.

The office union bargains on behalf of the participating unions, including the production workers' union, which raises the stakes for both sides. The agreement's precise coverage depends on its terms.

Key takeaway

Hyosung Heavy Industries' first office and technical staff union is on a 72-hour warning strike, asking for a 10% base pay raise and bonus rules after profit roughly doubled last year. The company says the union broke off talks too early and that its Changwon plant will keep running. The next step to watch is the wage offer the company brings back after the strike.