Insider Flash: Tetra Pak To Shut Korean Plant

 Tetra Pak To Shut Korean Plant
       
Swedish food packaging company Tetra Pak has decided to close its Korean production base after 21 years.

Desmond Joseph, Tetra Pak Korea’s marketing director, said Wednesday that the Swedish head office decided to shut the plant in Yoju, Gyeonggi Province and to reduce Korean operations to just sales and marketing.

The Yoju plant told its staff of the decision on March 9 and the company is currently negotiating with its labor union over severance benefits. The shutdown is part of the company’s reorganization of overseas production bases, Joseph said, although it will continue to operate its Japanese and Chinese factories.

Tetra Pak is a multinational with 57 branches and 48 overseas production plants and 8.1 billion euros in sales in 2005. The Swedish company set up the Yoju plant in 1986 to serve parts of Asia including Korea and Japan.

Experts attribute the shutdown to unfavorable business conditions including high wages and labor problems. The Tetra Pak Yoju Union held a month-long strike in the summer of 2003.

Over the last two years, several foreign companies have shut down their Korean plants after experiencing severe labor unrest. Toy maker Lego and cellphone maker Motorola shut their factories in Icheon, Gyeonggi Province in 2005. Pharmaceutical Roche closed its Korean plant in 2006.

Tetra Pak Yoju produced 2.5 billion packaging units a year, 45 percent of which were exported to Japan. However the head office last year decided to have its Japanese plant produce all its Japan products after complaints about products from Korea.

Even after having lost the Japanese market, the Yoju plant union demanded a whopping 19 percent pay raise. Management wanted the union to promise not to stage strikes and intervene in disputes of other companies. The union rejected the proposal.

Wage negotiations began last May and ran for nearly a year without showing signs of conclusion. The union claimed that management made an issue of shoddy production exports to Japan after having already decided to close the Korean plant.

Dankook University Prof. Kim Tae-ki said that labor relations are one of the critical factors for foreign companies in reorganizing their global production bases. No company wants to risk poor production and delayed shipments because of hostile labor relations, he said.

Source: url: http://english.chosun.com/w21data/html/news/200703/200703290022.html
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