[ Investment > The Ombudsman's Office At Work ]

hile Korean law forbids third parties from becoming directly involved in labor/management negotiations, the legislation is sufficiently broad to allow input by mediators in the interests of hastening a settlement. When a foreigninvested fiberglass producer found itself embroiled in a strike, it was in this role that the company called upon the Office of the Ombudsman to provide assistance.

  Owens Corning Korea came into being in 1999 when U.S. parent company Owens Corning took over a portion of the stakes of its Korean partner, LG Chemical to secure majority control over its affiliate in Korea, previously known as LG Owens Corning. The resulting company was 70-percent owned by Owens Corning, and the shares of its partners, LG Chemical and Asahi Glass of Japan were reduced to 29 percent and 1 percent, respectively. Labor/management relations over the last four years had been generally harmonious until negotiations for a new contract began this spring.

  The strike began July 11th at the company¡¯s Kimchon plant located in North Gyeongsang province after management failed to meet a laundry list of demands from the union. The list included a 20-percent wage hike and a 40-hour work week after recent legislation made the five-day work week mandatory only for firms with over 1,000 employees, thereby excluding Owens Corning with 245 workers.

  However, the most serious demand, that of job security was prompted by worker¡¯s fears that the company might relocate to China. One of the company¡¯s two furnaces was now 10 years old and the workforce feared that Owens Corning might relocate production across the West Sea to China rather than purchase a replacement for its Korean operation. For this reason, the union had demanded prior consultation in any of Owens Corning plans to merge or acquire other companies, relocate, lay off employees or outsource any of its functions. The demands were refused, the strike ensued and the management responded with a lockout.

   THE SITUATION ON THE GROUND In response to the request from the company, a delegation visited at Owens Corning¡¯s Korea corporate offices July 28th in Youido, Seoul. Ombudsman Office labour attorney, Kim Kee-Hak, the head of the office¡¯s grievance team, Lee Byong-Bok, and team member Ahn Young-Sub, met with CEO James S. Blaszczyk and Owens Corning vice president for Asia/Pacific, Peter K.H. Kim.

  ¡°The main purpose was to learn about the situation first hand,¡± said Kim. ¡°Mr. Blaszczyk indicted that Owens Corning had no plans to move production to China, but ruled out the union having a say in major decisions since that was solely the province of the management.¡± Mr. Blaszczyk went on to say that Korea was an extremely profitable location for Owens Corning and if the current labour problems could be resolved, the company would remain and continue to serve as the regional hub of the company.

  Two days later, Mr. Kim, along with Chong Suk-Yun of the Ministry of Labor (MOL), and Young Sang-Ji, investment planning manager with the Ministry of Commerce, Industry and Energy (MOCIE) traveled to Kimchon to assess the situation on the ground in order to find a means of resolving the impasse. Their first stop was Kimchon city hall where they met with the local chief of criminal investigation and provincial government officials.

  ¡°They were worried about the impact of the strike on the local economy since the workers weren¡¯t being paid,¡± said Mr. Kim. From there the delegation visited the Owens Corning Korea plant to the meet the general manager and the human resources manager, and where they were brought up to speed on the economics that confronted the firm.

  ¡°We learned that to replace the 10-year old furnace would cost $30 million,¡± said Mr. Kim. ¡°The workers wondered whether the company would make that kind of commitment to Korea. That was the basis of their fears. Even if the older furnace was scrapped without being replaced, that would mean Owens Corning would have to cut the workforce by half.¡±

   THE CLINCHER The delegation also met with the union leadership and won a positive response. ¡°The union welcomed us because they were able to see that the government cared about their plight,¡± said Mr. Kim. He said the leadership told him that they felt driven to take the action they did because they felt they had no other choice. ¡°We told the leadership plainly that they were striking as a result of pure speculation and that from what we had gleaned at company head offices in Youido, they might bring about what they feared most, i.e., the company relocating to China,¡± said Mr. Kim. ¡°They replied that they would try to negotiate with management as soon as possible.¡±

  What finally brought the union back to the table was an Aug. 7th announcement by Owens Corning that stated unless an agreement was reached by Aug. 13th the company would extinguish its two furnaces because lack of proper maintenance made them dangerous to operate. If the furnaces were shut down in this manner, it would take three months to start them up again.

  Thus within two weeks of the visit by Mr. Kim and his colleagues from MOCIE and MOL, a settlement was reached Aug. 11th. It included a 5-percent raise, a 42-hour workweek, a 500,000-won compensation payment for time off during the strike, a 250,000-won bonus for the Chusok (Korean Thanksgiving holiday), and a ¡°best efforts¡± commitment toward maintaining job security. Meanwhile, the company adhered to its policy of ¡°no work, no pay¡± by including a clause to that effect in the agreement.

  Though keeping away from the negotiating table as required by law, the Ombudsman¡¯s Office with support from related factions of government was able to nudge the strikers toward a settlement through the force of argument, and in the process provided direct support to foreign-invested company in Korea, and maintain a valuable pillar of the local economy in North Gyeongsang province.