The relationship between Samsung and its largest union is rapidly deteriorating and suddenly, a strike called by the union initially more for show than impact, has turned very serious. That means that as the union progresses its tactics, the impact on production is likely to quickly reach the point that it will be felt by the company and all of its customers.
See more on the escalating strike at Samsung
I first told you about a storm brewing between Samsung and its union a couple of weeks back. Labor actions in Asia are really quite rare. Because of various societal reasons, unions and management are typically more mutually respectful in the Asian culture as compared to here in the U.S. and issues are commonly worked out without the need to resort to a work stoppage.
However, this year the union says Samsung management is not playing ball as usual. So in mid-June the National Samsung Electronics Union (NSEU) organized a one-day walkout in an effort to get the attention of management. The union managed to have thousands of members walk off the job to hold a rally of solidarity.
It Sounds a Little Crazy…
Now for those of you who have had any experience of being involved with a union, this next part is going to sound a little crazy…but it didn’t surprise me a bit. The union organized the walkout for the day after a holiday when the factories are only beginning to ramp production back up and aren’t yet at full tilt. They did this to deliberately mute the impact on production and not cause too much pain for the company. It was meant to be a symbolic show of unity.
As I said, labor/management relations in Asia are a different kind of beast.
However, union leaders were angered when during and after that one-day event, the management went out of the way to make sure all the media knew that this action was a nothing-burger – it had NO impact. Company executives told the media that there was NO impact on production, revenues or profits. The executives might have even yawned as they said it!
During Negotiations, Samsung Reported a 15-Fold Increase in Operating Profits
Then, in early July the company reported a 15-fold increase in operating profits thanks to the dramatic increase in demand and prices for chips as the world scrambles to beef up infrastructure for AI. Yet, apparently, they are still stiff-arming the union at the negotiating table. So then the union announced it would call for a new work stoppage, this time for three days – and to involve more of their 30,000 members. That may not sound like much of an escalation to you…but in Asia, this was huge. The goal this time was to hurt production and show the company the union means business.
Once again, Samsung management should have recognized the signal being sent by the union, which was announced well in advance of the strike. But according to union leaders, all they are hearing is crickets. Management, it seems, is calling the union’s bluff.
From a Manageable Scuffle…to an All-Out War
So things quickly moved from a show of unity…to a manageable scuffle…to an all-out war. The union has announced that the strike will last indefinitely until its negotiators receive a reasonable offer from management. And this time, the union is coordinating across multiple Samsung production facilities. That initial one-day strike was mostly just in one production plant.
This is the first major strike in Samsung’s history. We are in uncharted territory. If the union’s resolve is as firm as they say, the strike could indeed last a protracted period of time and have a big impact on production.
The NSEU Says Samsung Chip Production Has Already Been Impacted
In fact, the NSEU claims that production lines using 8-inch wafers had “problems” beginning on day one of the strike. Or at least that’s what they told the Reuters News Agency.
Even though the NSEU is a relatively young union, it has rapidly grown to over 30,000 members and has been successful in getting thousands of its members engaged in these actions. One rally actually took place in front of a Samsung facility in the rain. While there was no official count of the number of union members who participated, estimates were in the mid- to upper-thousands.
The Two Sides Appear Far Apart in Their Goals
The union is looking for increased pay and an additional vacation day per year. Also, it wants to negotiate a new formula for how bonus pay is calculated. Right now, the system for employees is opaque, complicated, and based on factors out of their control. The NSEU is looking to adopt a bonus system that mimics the one Samsung has for executives that is based on personal performance goals.
So far, the two sides appear quite far apart.
Learn more about Samsung Electronics by visiting samsung.com (US website).
Leave a Reply