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| Members of the maintenance workers' union at water purifier maker Coway display banners demanding the company guarantee their job security during a press conference at the National Assembly on March 13. Courtesy of Korean Federation of Service Workers' Unions |
By Nam Hyun-woo
Maintenance workers at Coway have decided to form a union to more effectively deal with a possible layoff by Woongjin Group, which has acquired Korea's largest home appliance rental service provider, the workers said Tuesday.
There has been a rumor that the financially struggling Woongjin will downsize the Coway workforce to reduce labor costs.
According to Korean Federation of Service Workers' Unions (KFSU), the employees formed a union comprised of Coway's 1,500 maintenance staffers on Feb. 9 and demanded Woongjin guarantee their job security and R&D investments.
"To purchase Coway, Woongjin Thinkbig will pile up a tremendous amount of debt and it is expected to take most of Coway's net profit as dividends, which will undermine employees' wage and working condition seriously," the union said in a statement.
"Thus, we demand Coway and Woongjin recognize us as a union and directly employed staffers, and invest at least two percent of the company's average sales for the next three years for research and development."
Their move came amid Woongjin Group's debt-based financing to acquire Coway, which used to be part of the group and has been under control of a private equity fund for the past six years.
In 2013, Woongjin sold its 30.9 percent stake in Coway to private equity fund MBK Partners to address its liquidity shortage. After the selling, Coway successfully revamped its businesses, logging record highs of 2.7 trillion won ($2.38 billion) in sales and 519.8 billion won in operating profit last year.
To get the lucrative company back under its wing, Woongjin Group signed a deal recently purchasing up to a 27 percent stake in Coway. The group came up with nearly 2 trillion won, with 1.6 trillion won of it being debts mostly shouldered by its education unit, Woongjin Thinkbig.
The union members claimed Woongjin Thinkbig's debt ratio will grow by up to 330 percent when the company acquires a 27 percent stake in Coway, casting doubts on Woongjin's ability to repay the principal and interest for the debt.
Though Woongjin said it is "confident" in managing its debt ratio by selling some of the group's several units such as Woongjin Playdoci, a theme park operator, and Woongjin Energy, a solar power generation firm, analysts continue raising questions over the group's financing plan, citing its units' weakened cash flow.
The union also went after MBK Partners' margin from stake selling and past dividends from Coway, demanding the hedge fund provide 10 percent of its margins to maintenance staffers and other Coway employees.
A KFSU official said the union has applied for approval as a legitimate organization negotiation body to the Ministry of Employment and Labor, and it will be granted in the near future.
"All we know is the maintenance employees are in the process of receiving a regulatory approval as a negotiation body," a Coway official said. "The company will then exchange ideas with the union over the mutual growth between labor and management."
