ID :
183802
Mon, 05/23/2011 - 12:01
Auther :
Shortlink :
https://oananews.org//node/183802
The shortlink copeid
Negligence responsible for auto parts supply debacle
(Yonhap Editorial) SEOUL, May 23 (Yonhap) -- The country's automakers are being shaken by their roots because of a single engine part. The vehicle manufacturers are saying that their assembly lines may screech to a halt because Yoosung Enterprise Co., which supplies piston rings, has stopped production due to a labor strike. That a company with annual sales of 200 billion won can destabilize corporations boasting more than 80 trillion won in turnover is incomprehensible, as is the shoddy supply system of auto parts. The immediate emergency could affect the country's car exports.
Unionized workers at Yoosung, who have been negotiating with management since the beginning of this year over working conditions and salaries, went on strike on May 18 after the talks failed. Yoosung is said to produce 80 percent of the country's piston rings, a core engine part that costs 1,000 to 2,000 won each. Hyundai and Kia Motors buy 70 percent of the parts from Yoosung, and GM Korea purchases 50 percent. Kia has already curtailed production of Carnival passenger minivans from Friday due to shortages in piston rings, and Hyundai had to adjust production of Santa Fe sports utility vehicles on Monday. Industry watchers said the production of passenger and commercial vehicles will also be affected from Wednesday. Just one week into the strike at Yoosung, the parts supply will run dry.
More alarming is that other parts makers do not have the capacity to produce more piston rings, forcing the industry to hang on for hope that the labor strike at Yoosung will end. It is common sense to have parts in stock for emergencies. Auto companies are largely at fault for not having prepared even when the labor conflict at Yoosung was continuing for months. Such negligence has invited this debacle.
Automakers by practice do not stock up on parts to lessen their financial burdens. But the Yoosung incident has proven once again the perils of leaving the supply short and using a single supplier. The supply system is in need of an upending review. It may be useful to diversify the suppliers, as is done by foreign automakers who use a global network.
Management and industry officials said the Yoosung workers' strike is illegal and are threatening a raid to break up the strike. The workers, in turn, must compensate the automakers if they fail to provide the required parts. At this point, neither side stands to gain. A wise decision is required by both the union and the management.
Unionized workers at Yoosung, who have been negotiating with management since the beginning of this year over working conditions and salaries, went on strike on May 18 after the talks failed. Yoosung is said to produce 80 percent of the country's piston rings, a core engine part that costs 1,000 to 2,000 won each. Hyundai and Kia Motors buy 70 percent of the parts from Yoosung, and GM Korea purchases 50 percent. Kia has already curtailed production of Carnival passenger minivans from Friday due to shortages in piston rings, and Hyundai had to adjust production of Santa Fe sports utility vehicles on Monday. Industry watchers said the production of passenger and commercial vehicles will also be affected from Wednesday. Just one week into the strike at Yoosung, the parts supply will run dry.
More alarming is that other parts makers do not have the capacity to produce more piston rings, forcing the industry to hang on for hope that the labor strike at Yoosung will end. It is common sense to have parts in stock for emergencies. Auto companies are largely at fault for not having prepared even when the labor conflict at Yoosung was continuing for months. Such negligence has invited this debacle.
Automakers by practice do not stock up on parts to lessen their financial burdens. But the Yoosung incident has proven once again the perils of leaving the supply short and using a single supplier. The supply system is in need of an upending review. It may be useful to diversify the suppliers, as is done by foreign automakers who use a global network.
Management and industry officials said the Yoosung workers' strike is illegal and are threatening a raid to break up the strike. The workers, in turn, must compensate the automakers if they fail to provide the required parts. At this point, neither side stands to gain. A wise decision is required by both the union and the management.
