[ Society > Labor File ]

t was the worst of all possible worlds.
  In mid-1997, semiconductor manufacturer POSCO Huls Company (PHC, now MEMC Korea) was wracked by labor strife and at the same time faced declining revenues from a worsening global and also domestic chip market, the latter development being a symptom of a downturn that was to culminate in the national economic crisis in the December of that year.

  Six years earlier, the future had looked bright for the fledgling enterprise. It had been founded in 1991 as a 40/40/20 joint venture, respectively, between MEMC of the United States, (originally Monsanto Electronics Materials Company, a pioneer in the manufacture and development of silicon chips), Pohang Iron & Steel Co. (POSCO) and Samsung Electronics at the time when the silicon chip market was undergoing explosive growth.

  By 1994, all facility investment had been completed and the factory in Chonan City came on stream to supply burgeoning domestic and international demand. Just two years later in 1996 the company ranked as the 30th most profitable in the entire country.
  However, that same year, the workforce was unionized, beginning a cycle of conflict over wage demands that resulted in a bitter strike from July 8th to 24th 1997.
  Management responded with a lockout. At the same time, the semiconductor market was coming to the end of a three-year boom cycle and the country was sliding into deep recession. The operational rate at the Chonan factory fell to 40 percent and the company ended the year with a deficit. The company went deeper into the red in 1998 as the crisis worsened and would end the year with a loss of 30 billion won ($20.54 million).

  FUSION MANAGEMENT It was at this point that management and labor realized the need for cooperation if POSCO Huls Co. was not to join the swelling ranks of bankrupt companies and its workers, the ranks of the unemployed. The company under its president Jang Seung-Chul reached out to the union to begin what became known as ¡°fusion management,¡± a combination of American pragmatism and Korea paternalism, with its focus on moral duty over immediate gain.

  The company for its part, pledged not to dismiss a single worker and set up the largest welfare fund in the industry to assist workers on family matters such as weddings, funerals and children¡¯s education. Mr. Jang also invited the union president to participate in management meetings, a first for the company.
  Explained a company official, ¡°This was designed to build trust and share information with the union so they would know the company¡¯s circumstances and not ask for something that would be too difficult to provide.¡±

  To preserve jobs and help sustain the company at this difficult moment, the union agreed to accept a series of innovations. They included performance-based pay and rotational six-month layoffs of workers without pay on the understanding they would be eventually called back. The union also agreed to the return by workers of their bonuses, a considerable sacrifice when these regular augmentations, an accepted form of remuneration in Korea, can constitute between three to four months worth of an annual salary.

  MEASURING LOYALTY The union/management pact enabled the company to survive and the compromises on both sides were rewarded when the company produced a surplus of 10 billion won ($8.65 million) in 1999 ballooning to 30 billion won ($25.58 million) in 2000, performances backed by the promise of profit-sharing as made under the original agreement.

  So confident had the American partner become in its Korean venture by 2000 that it bought out POSCO¡¯s 40-percent share to claim 80 percent of the company¡¯s total equity and renamed the enterprise, MEMC Korea.

  The achievements of the company¡¯s labor and management were officially recognized when MEMC Korea received a 2001 Labor/Management Culture Award from the Ministry of Labor. The company received another accolade this year when it was listed among the 10 best Korean employers of 2003 by global outsourcing and consulting firm, Hewitt Associates. To participate in this assessment, firms worldwide must voluntarily apply to Hewitt and allow surveys of their top executives and management practices. They must also allow surveys of their employees to measure their satisfaction and loyalty to the company in question.

  The experience of MEMC in Korea amply demonstrates that when the chips are down, Korean labor is ready and willing to work with foreign management and bear extraordinary sacrifices in anticipation that both may eventually prosper in common endeavor.