Shipbuilding Industry on the 'Eve of a Storm' as General Strike Looms—Will Preparations for the AI Era Be Hampered?

[Financial News] Labor unions at major shipbuilding companies are increasingly likely to launch a general strike. If labor-management negotiations fail to make dramatic progress this week, a full-scale strike is expected after the Chuseok holiday, bringing operations to a complete halt. Concerns are growing that this could delay efforts to secure future growth opportunities arising from the expansion of AI data centers (DCs).
According to the shipbuilding industry on the 21st, HD Hyundai Heavy Industries, the industry's flagship company, is at a crossroads over whether to halt operations. KMWU's HD Hyundai Heavy Industries Branch declared the breakdown of negotiations and an all-out struggle on the 18th, announcing plans to launch a full-scale strike after Chuseok. For now, it will refrain from striking before the holiday and hold behind-the-scenes talks with management.
HD Hyundai Heavy Industries had previously proposed a package centered on a 110,000-won increase in base pay, but the union rejected it. The union continues to demand a share equivalent to 30% of operating profit. Although the Ministry of Employment and Labor issued guidance stating that the issue is not subject to an industrial dispute, the union is using forecasts that this year's operating profit could rise by as much as twofold from last year as leverage in negotiations. It is calling for base pay to be increased by at least 149,600 won as part of its demand for a share of operating profit. The Central Industrial Dispute Countermeasures Committee also stated bluntly, "The reason for the breakdown is insufficient fixed pay," adding, "We will secure fair compensation commensurate with the boom."
The union's means of enforcing its demands is a full-scale strike. Although previous partial strikes formally involved all union members, actual participation was limited, and their impact on operations was restricted because the production process is divided into separate stages. However, if the union halts all processes and blocks logistics through a full-scale strike, production disruptions will be unavoidable. The union also launched a full-scale strike last year for the first time in three years. If another full-scale strike takes place this time, it will be the second consecutive year.
KMWU's Hanwha Ocean Branch has alternated between partial and general strikes since August 31. From the 14th, it significantly escalated its actions by occupying all Goliath cranes at Hanwha Ocean's Geoje Shipyard. These cranes are essential pieces of equipment used to lift hull blocks weighing hundreds of tons. If they remain idle, both assembly and welding work will inevitably be delayed. If the blocks cannot be moved and pile up excessively, the entire production process will fall behind.
The Shipbuilding Industry Labor Union Alliance previously announced a joint strike involving unions at six companies, including HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries. If a joint strike takes place after Chuseok, it is expected to develop into an industrywide general strike. In addition to the high-intensity full-scale strikes by KMWU's HD Hyundai Heavy Industries Branch and Hanwha Ocean Branch, the Samsung Heavy Industries Workers' Council, whose members have not yet gone on strike, could also begin industrial action. The council has continued its tent protest near Samsung Electronics Chairman Lee Jae-yong's residence in Hannam-dong, Seoul.

The key question is how much the labor and management sides can narrow their differences through behind-the-scenes negotiations before Chuseok. KMWU's HD Hyundai Heavy Industries Branch and Hanwha Ocean Branch are both demanding a 149,600-won increase in base pay. HD Hyundai Heavy Industries and Hanwha Ocean have offered increases of 110,000 won and 100,000 won, respectively. The Samsung Heavy Industries Workers' Council is seeking a 9.3% increase in base pay, while management has proposed a 4.7% increase.
Instead, each company has proposed sharply increasing one-time payments such as bonuses, incentive payments and performance bonuses. For example, HD Hyundai Heavy Industries has offered a 110,000-won increase in base pay, along with an incentive payment of 10 million won plus 200% and gift certificates worth 500,000 won. Including the estimated performance bonus, the total compensation is calculated to reach nearly 40 million won per employee.
Nevertheless, concerns are growing that the broader shipbuilding industry could be shaken if operations ultimately come to a halt. First at stake is the 200 trillion won order backlog held by the three major shipbuilders. With order schedules tightly packed, even a brief stoppage could cause significant damage.
Moreover, HD Hyundai Heavy Industries is working to expand production of HiMSEN engines, power-generation engines for AI data centers (AIDCs), while Hanwha Ocean and Samsung Heavy Industries are struggling to secure future growth opportunities such as floating data centers (FDCs). Their preparations to survive fluctuations in the shipbuilding market cycle and industrial changes in the AI era are being held back by the unions.

[email protected] Kim Yun-ho Reporter