Ssangyong Motor, union agree on wage deal

Ssangyong Motor Co. and its labor union reached a wage deal on Tuesday, averting a full-scale strike over salary negotiations at a time when the automaker is reeling from a plunge in sales, union officials said.
 
The union accepted Ssangyong's offer of a 62,000 won (US$61.4) increase in basic monthly salary and a bonus payment of two million won for each worker, in order to "overcome a management crisis," according to a union official.

The tentative deal must still be voted on by the union's 5,200 workers. Ssangyong, the South Korean unit of China's Shanghai Automotive Industry Corp. (SAIC), is the first automaker in South Korea to reach a wage deal this year.

The deal came less than a week after Ssangyong's union leaders met with SAIC Vice Chairman Chen Hong to protest what the union called the Chinese parent's mismanagement and seek fresh capital.

At the meeting, the SAIC executive ruled out the possibility of the Chinese automaker selling Ssangyong Motor amid fears of a cash shortage, according to Ssangyong union chief Chung Il-kwon.

Union leaders have been anxious recently, as a sudden drop in vehicle sales of Ssangyong could tip the company into a liquidity crisis unless its Chinese parent injects new capital into the South Korean unit.

Officials at Ssangyong's public relations team declined to comment on the meeting between the SAIC executive and union leaders.

Ssangyong said it will close its sole plant in Pyeongtaek, 65 kilometers southwest of Seoul, for 15 days from Thursday as sales plunged.

Analysts say higher diesel prices in South Korea and a stagnant economy have led Ssangyong, which generates more than three-quarters of its sales domestically, to curtail production.

Last month, Ssangyong saw its domestic sales plunge 67 percent on-year to 1,902 units.

In the first six months of this year, Ssangyong, South Korea's smallest automaker, sold 26 percent fewer vehicles as consumers shunned its gas-guzzling sport-utility vehicles. Ssangyong's vehicle lineup is dominated by SUVs and luxury sedans.

The plant shutdown will be the first for Ssangyong since it idled some of its production lines in May because of sluggish demand.