Cho Nam-ho, chairman of Hanjin Heavy Industries & Construction Co., apologized multiple times during a parliamentary hearing Thursday over a prolonged labor dispute at the company’s shipyard in Busan. 

The humbled tycoon, however, defended the firm’s layoff plan, which sparked the dispute, saying it was inevitable for survival.

“I apologize for having caused unnecessary confusion and public concern,” a humbled Cho told members of the National Assembly’s committee on labor.

Lawmakers from both ruling and opposition parties pounced on him for his “irresponsible and evasive” actions as his company was embroiled in one of the worst labor disputes that the country has witnessed in recent years.

The chairman was thought to have stayed overseas for business for the past two months, skipping two previous Assembly hearings. However, it was revealed Wednesday that he was in Korea for two weeks in July.

“You, as the chairman, should have taken the lead in efforts to settle the dispute,” Rep. Rhee Beom-kwan of the Grand National Party said.

The worst labor dispute in recent years

The labor dispute at Hanjin was sparked by the firm’s dismissal of 400 workers at its shipyard in Yeongdo, Busan, in December, last year.

Unionized workers staged a strike demanding the reversal of the layoffs, while the management responded with the shutdown of the shipyard. Hundreds of sympathizers with the union and other labor activists headed for the company aboard the “Bus of Hope” to show their solidarity.

After nearly six months of the strike, the two sides reached an agreement on June 27, with the management promising additional compensation for those fired.

Yet the dispute was far from over.

Of the 400 fired, 306 accepted the company’s early retirement package. The remaining 94 still refuse, demanding the firm rehire them.

Kim Jin-suk, a female labor activist who once worked for Hanjin, has continued a sit-in all by herself atop a 40-meter-high tower crane at the Yeongdo shipyard for more than 220 days.

She says she will not come down from the crane unless the company reverses the dismissal of the 94. The fourth Hope Bus rally is scheduled for Seoul on Aug. 27.

Layoff was inevitable?

The saga at Hanjin rekindled controversy over the massive layoff program implemented to avert a managerial crisis.

While the business community laments the difficulty of firing employees even in times of crisis, labor activities and some progressive politicians demand stricter rules to stop bosses from firing workers because of crises caused by their own management mistakes.

At the National Assembly on Thursday, the overriding question was, yet again, whether the layoffs were justifiable.

Hanjin, announcing massive dismissals, cited the lack of new orders at Yeongdo shipyards as the main reason for the job cut.

Cho reiterated this during the hearing.

“The situation is dire. We just can’t retain all of those on payroll,” he said. “(The layoff of 400) was an inevitable decision to take care of the remaining 1,400 workers.”

Hanjin Heavy reported a net loss of 51.7 billion won last year. The Yeongdo shipyard had received no new order since 2007 until recently. The company announced in July that the shipyard received an order for four vessels shortly after the end of the strike.

Unionized workers say the company is passing all responsibility to the workers.

“Why only workers have to suffer when the bosses enjoy a pay raise and stock and cash dividends, instead of taking responsibility for their mismanagement,” labor activist Kim wrote in a letter to members of the parliamentary committee.

GNP Rep. Lee Mi-kyung called the crisis at Hanjin a sham manipulated by the management wanting to fire workers at the Yeongdo shipyard.

She pointed out that the company paid cash dividends totaling 44 billion won in the past three years.

“Even on the day after the announcement of the layoffs, Hanjin paid 17.4 billion won in dividends to major shareholders,” including members of chairman Cho’s family, she said.

“How do you expect workers to accept the layoff plan? Is this company really in crisis?” she questioned.

She also pointed out that while Yeongdo shipyard received no new orders, Hanjin’s new shipyard in Subic Bay, the Philippines, secured 31 deals. The lawmaker questioned whether the company intentionally allocated all the orders to the Subic yard.

The Hanjin chairman said Yeongdo yard has lost its price competitiveness, which was the reason it received no new orders. 


By Lee Sun-young
(milaya@heraldcorp.com)