South Korea: Hite Jinro forced to temporarily close four plants due to strike

Hite Jinro, one of the leading brewers and distillers in South Korea told investors at the beginning of this week that a widespread strike forced the company to shut down four of its six factories. On Sept. 25, unionized workers started a first strike, demanding a 7 percent hike in the base salary. Last Friday, the strike was extended with 1.700 out of 2.300 unionized workers on strike, when workers also demanded a job guarantee.

In  March, Hite Jinro announced a voluntary retirement program with job cuts of 3% (inside.beer, 10.3.2017). Later, in September it became known that the brewer considers selling one of its three breweries (inside.beer, 29.9.2017).

Problems arise because Hite Jinro, second largest brewing company in South Korea with a production of 6.62 million hectoliters beer in 2016, is losing market share to number three brewer Lotte Chilsung Beverage and a growing import beer market.

South Korea’s beer imports were estimated to have reached a record high of about $182.3 million in 2016, up nearly 29 percent from the same period in 2015. In 2015 import beer amounted to 8.4 of the total beer market. Japanese brands lead the imported beer market, with 29 per cent by value, followed by German (13.2 percent) and Irish (11.5 per cent) beers.

"Labor and management held their 20th negotiation on Oct. 16 and 17, but failed to narrow their differences," a company official said. "The biggest obstacle is the union's demand for the dismissal of the executive handling labor-related issues. But the demand cannot be accepted because only management has the authority over personnel affairs. The matter is non-negotiable."

On Thursday the situation eased as dozens of union workers reported back to work and production at the Changwon plant could be resumed. "The remaining workers should also return to the production lines as quickly as possible to supply as much product as our distributors and retail customers need," a company official said. Due to the plant shutdown, Hite Jinro had been temporarily unable to meet demand for its best-selling Chamisul soju.

Finally on Friday all six plants resumed production after company and labor union reached an agreement on a wage increase of 4%. “Chamisul supply should be back to normal by next week,” the company spokesman said. 

 

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