SEOUL - The South Korean government moved closer to putting bankrupt Kia Motors Corp. on the auction block. Meanwhile, Kia Motors' union and management remained deadlocked Friday, June 5, over a strike that had begun June 1 over job security.
Although the strike has shut down production of all export models, dealers are not expected to suffer, because they already have sufficient stocks. As of May 1, Kia dealers in the United States had an average 57 days' inventory, according to the Automotive News Data Center.
Park Tae-Young, Korea's minister of commerce, industry and energy, told the Chosun Daily newspaper that any auction for Kia should be open to all bidders, domestic and foreign.
'As to the public bidding for Kia Motors, a final policy will be decided at a meeting of creditor banks by the end of June. We will not impose any limitation on qualifications of domestic and foreign companies which want to apply for the public bidding,' Park said. He implied an auction may occur by the end of July.
Park also hinted that he does not expect Samsung Motor Corp. to be a serious bidder for Kia.
'Samsung Motors will never be able to gain sufficient competitiveness in view of its current (management) state,' Park told the newspaper.
The Kia union's strike follows one a week earlier by Hyundai Motor Co.'s union in response to management's plans to lay off 8,000 workers. Kia has not yet publicized any layoff targets, but cuts are widely seen as imminent. Because Kia's case is much more desperate, the number of jobs at stake at Kia could be much greater than at Hyundai.
The strike is the biggest test yet for Kia Group Chairman Yoo Chong-Yul, the company's bankruptcy court-appointed administrator. Yoo vowed legal action against strikers and strict enforcement of the 'no work, no pay' rule.
As part of strike settlements in the past, companies often have buckled to union pressure to pay wages lost during strikes regardless of the legality of the dispute.
Yoo also warned that the strike would push Kia toward total collapse and would further drag down the nation's economy.
Industry analysts see labor peace as imperative if Kia is to succeed with its restructuring efforts. Continued strikes would not only alarm domestic creditors but might scare off would-be bidders such as Ford Motor Co. and Mazda Motor Corp., which are studying raising their stake in Kia from a combined 16.9 percent.
PEACEFUL SO FAR
The Kia strike has been generally peaceful thus far. Workers have staged sit-ins at the company's Asan and Sohari assembly plants and its Seoul headquarters.
Kia union members also demanded the resignation of Yoo, holding him responsible for the widening rift between labor and management. They vowed to continue their strike even during President Kim Dae-Jung's state visit to the United States, which was scheduled to start Saturday, June 6.