Empty shipyard and
suicides as South Korea's
'Hyundai Town' grapples
with grim future
ULSAN, SOUTH KOREA (REUTERS) - When Lee Dong-hee
came toUlsan to work for Hyundai Heavy Industries
five years ago, shipyards
in the city known as Hyundai Town operated day and night,
and workers could make triple South Korea's annual average salary.
came toUlsan to work for Hyundai Heavy Industries
five years ago, shipyards
in the city known as Hyundai Town operated day and night,
and workers could make triple South Korea's annual average salary.
But the 52-year-old has since been laid off, joining some 27,000
workers and subcontractors who lost their jobs at Hyundai Heavy
between 2015 and 2017 as ship orders plunged.
workers and subcontractors who lost their jobs at Hyundai Heavy
between 2015 and 2017 as ship orders plunged.
To support their family, Mr Lee's wife took a minimum wage job
at a Hyundai Motor supplier. His 20-year-old daughter, who e
ntered a Hyundai Heavy-affiliated university hoping to land a
job in Ulsan, is now looking for work elsewhere.
at a Hyundai Motor supplier. His 20-year-old daughter, who e
ntered a Hyundai Heavy-affiliated university hoping to land a
job in Ulsan, is now looking for work elsewhere.
The Lee family's fortunes mirror the decline of Ulsan, which is now
reeling from Chinese competition, rising labour costs and its
over-reliance on Hyundai - one of the giant, family-run conglomerates
or chaebol that dominate South Korea.
reeling from Chinese competition, rising labour costs and its
over-reliance on Hyundai - one of the giant, family-run conglomerates
or chaebol that dominate South Korea.
Generations of Hyundai workers like Mr Lee powered South Korea's
transformation from the ashes of the 1950-53 Korean War to an i
ndustrial and manufacturing powerhouse, making the south-eastern
port of Ulsan the country's richest city by 2007.
transformation from the ashes of the 1950-53 Korean War to an i
ndustrial and manufacturing powerhouse, making the south-eastern
port of Ulsan the country's richest city by 2007.
But some experts say the chaebols have now become complacent and risk
averse, failing to keep pace with their overseas competitors.
averse, failing to keep pace with their overseas competitors.
South Korea's focus on exports has also made Asia's fourth-largest
economy vulnerable to growing protectionism by major trade partners
and other external shocks.
economy vulnerable to growing protectionism by major trade partners
and other external shocks.
"Hyundai was everything to me. I feel hopeless," Mr Lee said at
his apartment, a high-rise complex popular with Hyundai Motor
workers 10km from the carmaker's factory.
his apartment, a high-rise complex popular with Hyundai Motor
workers 10km from the carmaker's factory.
With young people fleeing in search of jobs, Ulsan is now the
fastest-ageing city in the country, according to Statistics Korea.
The city's population of 1.1 million has more than quadrupled since 1970,
but fell for the first time in 2016 even as population grew in the
rest of the country.
fastest-ageing city in the country, according to Statistics Korea.
The city's population of 1.1 million has more than quadrupled since 1970,
but fell for the first time in 2016 even as population grew in the
rest of the country.
RUST BELT
In many ways, the challenges facing Ulsan mirror those faced in the
American Midwest in the 1970s and 1980s, when the once
prosperous industrial heartland was hit by massive job and
population losses.
American Midwest in the 1970s and 1980s, when the once
prosperous industrial heartland was hit by massive job and
population losses.
Some experts and industry executive warn that Ulsan - home to the world's biggest shipbuilder and largest carmaking complex - might be South Korea's "Rust Belt" in the making.
"It could be worse here, since it's all about Hyundai and its suppliers,"
said Mr Mo Jong-ryn, a professor of international political economics
at Yonsei University in Seoul. "There is no alternative."
said Mr Mo Jong-ryn, a professor of international political economics
at Yonsei University in Seoul. "There is no alternative."
Legendary businessman Chung Ju-yung founded Hyundai Motor in
Ulsan in 1967 and Hyundai Heavy six years later, turning the small f
ishing village known for whale hunting into a giant company town.
Ulsan in 1967 and Hyundai Heavy six years later, turning the small f
ishing village known for whale hunting into a giant company town.
For decades, job seekers flocked to the city, drawn by high wages,
company-subsidised housing and generous benefits.
company-subsidised housing and generous benefits.
Hyundai's dominance is still keenly felt. Workers wearing grey Hyundai
uniforms drive Hyundai cars, shop at Hyundai department stores,
live in Hyundai apartments and go to Hyundai hospitals for
medical service. Their children go to Hyundai schools and universities.
uniforms drive Hyundai cars, shop at Hyundai department stores,
live in Hyundai apartments and go to Hyundai hospitals for
medical service. Their children go to Hyundai schools and universities.
In the wake of the downturn, Hyundai Heavy has been selling assets
such as an employees' dormitory and a large foreign community
complex it used for clients such as BP and Exxon Mobil and their
families, officials say. The foreigners' complex featured townhouses,
a golf course, a swimming pool and school.
such as an employees' dormitory and a large foreign community
complex it used for clients such as BP and Exxon Mobil and their
families, officials say. The foreigners' complex featured townhouses,
a golf course, a swimming pool and school.
A spokesman said Hyundai Heavy was doing its utmost to
"normalise our company", working with labour unions to
address a lack of work and an idled workforce.
"normalise our company", working with labour unions to
address a lack of work and an idled workforce.
Ripples from Hyundai's struggles spread throughout Ulsan.
Ms Eom Soon-ui runs a small noodle shop in a traditional market
blocks away from Hyundai Heavy's headquarters. One recent workday,
the market was mostly empty, with about a dozen restaurants as well
as uniform shops catering to shipyard workers closed.
blocks away from Hyundai Heavy's headquarters. One recent workday,
the market was mostly empty, with about a dozen restaurants as well
as uniform shops catering to shipyard workers closed.
"Hyundai makes or breaks for merchants like us. They're doing poorly,
so I'm struggling to make ends meet," she said.
so I'm struggling to make ends meet," she said.
Ulsan accounted for 12 per cent of South Korea's exports last year,
the lowest since 2000 and down from its peak of 19 per cent in 2008,
according to customs data.
the lowest since 2000 and down from its peak of 19 per cent in 2008,
according to customs data.
The city also has seen a rising number of suicides and now has the
highest suicide rate in the country for those aged between 25 and 29,
according to Statistics Korea.
highest suicide rate in the country for those aged between 25 and 29,
according to Statistics Korea.
Ulsan University Hospital, run by Hyundai Heavy, recorded 182 suicide
attempts in the first half of this year, compared to about 150 a
year earlier, a hospital official said.
attempts in the first half of this year, compared to about 150 a
year earlier, a hospital official said.
Taxi drivers have been told by police not to drop people off on Ulsan's
newly built bridge after three people killed themselves there in just
one month.
newly built bridge after three people killed themselves there in just
one month.
"People believed that if they work hard, they will be better off, and
if their children study hard, they will be better off," said
Mr Park Sang-hoon, an official at an Ulsan suicide prevention centre.
"Confronting a different reality now, it seems that many of them are
getting to a point of hopelessness, and some are even making
extreme choices."
if their children study hard, they will be better off," said
Mr Park Sang-hoon, an official at an Ulsan suicide prevention centre.
"Confronting a different reality now, it seems that many of them are
getting to a point of hopelessness, and some are even making
extreme choices."
FALTERING ABROAD
After massive shipbuilding job losses, auto workers fear it could
be their turn next.
be their turn next.
Hyundai Motor has already been moving some production
offshore, and an internal forecast seen by Reuters
shows that domestic output is expected to fall to 37 per cent
this year, down from nearly 80 per cent in 2004.
offshore, and an internal forecast seen by Reuters
shows that domestic output is expected to fall to 37 per cent
this year, down from nearly 80 per cent in 2004.
Executives say that it is necessary because of high labour costs and
strong unions at home.
strong unions at home.
But workers say many of Hyundai's problems are its own
making, like failing to forecast an SUV boom in the key
United States market and missing the shift to electric cars.
making, like failing to forecast an SUV boom in the key
United States market and missing the shift to electric cars.
Hyundai Motors declined to comment for this story.
Earlier this year, it pledged to hire 45,000 across the group
over the next five years and invest heavily in new businesses
including "wearable robots" and artificial intelligence.
Earlier this year, it pledged to hire 45,000 across the group
over the next five years and invest heavily in new businesses
including "wearable robots" and artificial intelligence.
However, some experts say South Korea's reliance on a few
powerful chaebols is holding the country back.
powerful chaebols is holding the country back.
South Korea's top 10 conglomerates had revenue equivalent to
66 per cent of the country's gross domestic product in 2017.
By comparison, the combined revenue of America's top 500 companies
was
65 per cent of US GDP, according to Fortune magazine's annual survey
last year.
66 per cent of the country's gross domestic product in 2017.
By comparison, the combined revenue of America's top 500 companies
was
65 per cent of US GDP, according to Fortune magazine's annual survey
last year.
"South Korea's chaebol have been complacent," said Mr Lee Dong-gull,
the chairman of state-run Korea Development Bank.
the chairman of state-run Korea Development Bank.
Because of their near monopolistic market positions at home,
conglomerates have been reluctant to take risks and slower to innovate,
he said.
conglomerates have been reluctant to take risks and slower to innovate,
he said.
Faltering in key overseas markets, South Korea forecasts export
growth will slow to 5.3 per cent in 2018 and 2.5 per cent next year,
from 15.8 per cent last year.
growth will slow to 5.3 per cent in 2018 and 2.5 per cent next year,
from 15.8 per cent last year.
NO LONGER A PARADISE
That means more pain for Ulsan and other exports hubs.
South Korean President Moon Jae-in designated Ulsan and
several other cities as "industrial crisis zones" in May, setting
aside one trillion won (S$1.2 billion) this year to support a
ffected workers and suppliers, and to promote new industries.
several other cities as "industrial crisis zones" in May, setting
aside one trillion won (S$1.2 billion) this year to support a
ffected workers and suppliers, and to promote new industries.
Mr Moon says the chaebol-oriented economic policy has reached
its limit and has widened the gap between haves and have-nots.
its limit and has widened the gap between haves and have-nots.
Under a new policy of "innovative growth", Seoul is boosting
investment in fuel cells and self-driving cars, "smart factories"
and drones, as well as artificial intelligence, the Internet of Things and big data.
investment in fuel cells and self-driving cars, "smart factories"
and drones, as well as artificial intelligence, the Internet of Things and big data.
But long-time Hyundai men say they aren't feeling benefits of the
new policy.
new policy.
Mr Lee, the former Hyundai Heavy worker, learnt painting and
moulding to do home interior work, but is struggling to find a job
because the downturn has also hit the real estate sector.
moulding to do home interior work, but is struggling to find a job
because the downturn has also hit the real estate sector.
Mr Ha M.H., who came to Ulsan in 1982, said he is leaving Hyundai
Heavy in August after 36 years, because the company's backlog for
offshore platforms has run dry.
Heavy in August after 36 years, because the company's backlog for
offshore platforms has run dry.
"Foreign inspectors from Scotland and elsewhere who used to
work here in the good old days still call Ulsan a paradise,
"Mr Ha said. "All of my friends have left, and I am the last
man standing."
work here in the good old days still call Ulsan a paradise,
"Mr Ha said. "All of my friends have left, and I am the last
man standing."
