[Editorial] Don’t look away

Shareholders of Hyundai Heavy Industries approved the company’s plan to split up at their extraordinary meeting in a gymnasium at the University of Ulsan on Friday.

It marked the first step in the process of Hyundai Heavy’s proposed merger with Daewoo Shipbuilding & Marine Engineering.

Hyundai Heavy changed the location of the meeting at the last minute to avoid a protest. The initial venue had been seized by union members of the companies and members of the Korean Confederation of Trade Unions, who oppose the plan.

Nevertheless, some protesters belatedly found the gymnasium and went on a rampage, breaking glass doors and hurling chairs.

It is hard to deny that Hyundai Heavy’s takeover of Daewoo Shipbuilding is inevitable if South Korea’s shipbuilding industry is to survive.

Korea, which once dominated the world shipbuilding market, is reeling from the shock of decreased container traffic. The country had about 200,000 shipbuilding-related jobs five years ago, but the figure has almost halved. Daewoo Shipbuilding has received about 10 trillion won ($8.3 billion) in public funds from the state-owned Korea Development Bank over the past two decades, but normalization of its management is nowhere in sight.

If the two companies merge, their cutthroat underbidding competition will disappear, investment overlap will be eliminated, R&D will benefit from synergy and the economy of scale will become larger.

A merger is the most effective way for Korea to reinvigorate its shipbuilding industry and regain global market dominance.

But it faces a rocky road to that goal.

Hyundai Heavy requires approval from antitrust authorities in about 10 countries, including Korea, China, Japan and the European Union. If one country objects, the merger plan will go up in smoke.

In this situation, the Hyundai Heavy union threatens to go on strike against the merger and file a lawsuit seeking to nullify the shareholders meeting. Daewoo Shipbuilding’s union vowed to block Hyundai Heavy’s on-the-spot inspection of its shipyard.

Worsening labor conflicts will make it more difficult to win approval from antitrust authorities.

It is understandable that union members are concerned about losing their jobs in the process of the merger. But what if they abort the merger? Daewoo Shipbuilding cannot subsist on public funds for good.

Union members of the companies illegally occupied a building where the shareholders meeting was to be held, and staged a sit-in both inside and outside it with members of the confederation. They even ignored a court order to vacate.

Their concerns about job losses are to some extent understandable, but if they keep staging illegal protests, they will be disregarded by the people.

Now that the split-up plan has been approved, it is desirable to seek a win-win deal. The unions had better drop their objections. Where companies exist, so do jobs and unions.

Police deployed 4,200 officers, but they did not attempt to disperse the illegal protesters. Police said if they tried, the situation could worsen, but they effectively neglected their duty.

A bigger problem is the hands-off and ambiguous attitude of the government.

An official with the Ministry of Trade, Energy and Industry reportedly said it was inappropriate for the ministry to express a view because the matter concerned a company’s internal decision-making process.

“The government will take legal measures against illegal acts by unions,” Minister of Employment and Labor Lee Jae-kap said. But his remarks came two hours after the police confrontation with protesters ended and four days after the protesters occupied the venue of the shareholders meeting.

Most people know Lee’s words are empty. They have witnessed the Moon Jae-in administration look away from illegal and violent labor protests.

Restructuring the industry is important for the national economy, and the efforts have been led by the government. The government must not dismiss the anti-merger protests as yet another labor conflict. If the government acts this way, who will trust its decisions and follow them?

It is not easy to figure out solutions to labor conflicts, yet the government ought to try actively to settle them. It should not pass the buck to Hyundai Heavy. The government must show a clear-cut and unbiased attitude toward the merger.