LTW: Tokyo Tension, NK Threats, & Bonus Wage Ruling

1. National
1) Korea and Japan difficult over Mr. Abe and bullets  
The relationship between Korea and Japan is getting sour over two issues. The first one is the controversial Yasukuni Shrine visit by Japanese PM Shinzo Abe, which has drawn criticism from the U.S. and China, as well as both South Korea and North Korea. Even more Japanese have negative views on Abe’s visit to Yasukuni that holds 14 of Japan’s Class-A war criminals. The other is over the borrowing of 10,000 bullets from Japan’s Self-Defense Forces by the South Korean Hanbit Unit in South Sudan when there was a big battle in Bor last week. The Japanese government is using the case to bolster its right of “collective self-defense” as the 10,000 bullets to Hanbit Unit was Japan’s first ammunition to another country since World War II.

There are 284 Korean soldiers in Hanbit Unit whose assignment is to build infrastructure and to provide medical service, and my first son is one of the 284. The opposition party is criticizing the commander of Hanbit Unit for creating a diplomatic issue by borrowing bullets from the Japanese forces. That is non sense. If I am at a battle, and if my soldiers are at a risk because of lack of bullets, I would send S.O.S. for more bullets even to the enemy.

2) Kim Jong-un warns of sudden war
North Korean leader Kim Jong-un warned that war could break out “without any prior notice” while inspecting a military post, urging the soldiers to improve combat readiness. Kim was accompanied by a new troika who appear to be propping up his power after the execution of his uncle Jang Song-taik.

 

Rumors have it that Jang was executed because he had an affair with Kim’s own wife or Jang had attempted a coup to overthrow Kim, or Jang stole money out of Kim’s pocket. Whatever the truth, Kim was angry enough to spray his uncle with anti aircraft guns and then burn the remaining body with flame-thrower. Kim was a good diplomat, though. He was cautious enough not to borrow bullets from Japan.

2. Economy
1) Korean railway under strike 
The workers in KORAIL, the national railway, have been in strike from Dec 9, demanding the government scrap its plan to set up a new rail operator for the new bullet train line linking Gangnam to Busan, calling it the first step to toward privatizing the KORAIL. The government is responding that it is not “privatization,” but “normalization through competition.” The KORAIL employees are paid the best in the world, even more than those in the U.S. or Germany, while KORAIL is suffering under 17 trillion Won debt. The railway is running only 70%, but the strike is to end soon as KORAIL and the union is on a single track, running at max speed to each other at the moment.

  

Though railroad was first built in 1899 in Korea, between Seoul and Incheon, Choi Yeon-hye is the first female head of Korean railway.  She is using the same rhetoric as Ronald Reagan had with the striking U.S. air-traffic controls in 1981. “Come back to work by Dec 28 or face the consequences.” The Dec 28 has passed, and KORAIL did begin to hire new employees to replace the strikers. All the male heads of KORAIL before Choi had no balls to make the organization straight. Choi has no balls for sure, but it seems she has guts instead.

2) Supreme court rules on ordinary wage issue   
A big labor issue for the past two years was whether the fixed bonus is to be counted as the ordinary wage that is the basis of over time payment. The Supreme Court ruled on Dec 18 over the law suit filed by the union of an auto supplier Kabul Auto Tech that the fixed bonus be included in the ordinary wage, which is a victory for the union, but held back from forcing the company to pay three years’ worth retroactive pay, a good news for the company, under “principle of good faith and trust.” In short, the court said ‘change from now on, but leave the past alone.’ The labor department in the government announced it respects the court decision, and there will be big changes in the labor law within a few months.

  

 Outgoing GM Chairman Dan Ackerson complained to president Park Geun-hye last April to do something about the ordinary wage issue that may cause billions of dollars for GM Korea. With the latest decision from the court, Mr. Ackerson got only half of what he wanted. Mary Barra, the first GM CEO without balls in its 105 year history from January, will probably do better than any of her predecessors with all the guts she has to break the 105 inch thick glass ceiling.

3. Auto Industry
1) Hyundai becomes a legend with 1 million cars in China    
Hyundai Beijing has sold over 1 million cars in China this year, 11 years after it began production at its joint venture plant with Beijing Automotive Group, becoming the fastest automaker to reach that milestone in China. Hyundai’s sales target for this year was 970K units. Hyundai plans to maker more vehicles in China, with the grand opening of new commercial vehicle plant with annual capacity of 150K planned in mid 2014 that will add another 150K. Hyundai’s sister Kia will make some 500K in China this year.
   

Mr.Jae-man Noh had been the plant manager of Hyundai Beijing from the start-up until two years ago. Ex-quality manager at Hyundai’s Bromont plant in Quebec, Mr. Noh has been credited with expanding the Chinese market from ground zero with his “Qualite en tete, or Quality in mind” approach. Mr. Noh being a friend of mine from Bromont, I once asked him if Beijing Hyundai would be better had I worked under him in Beijing instead of leaving Hyundai. His answer was ‘Noh.’

Regards,
H.S.

L2W - NK #2 Sacked, Kimchi Recognition, CNN Top Ten

1. National

1) No.2 man in North Korea got sacked

Being the son-in-law of North Korea’s founder Kim Il-sung, brother-in-law of Kim Jong-il, and uncle-in-law of Kim Jong-un, Jang Sung-taik has been known as No.2 man after Kim Jong-un. It seems Jang’s career has ended, however, as he has been stripped of all of his posts and arrested last week, while his two henchmen were publicly executed on charges of damaging the Workers Party. Jang’s another right-hand man is seeking an asylum in South Korean embassy in China. It is reported that Jang’s cronies have put their hands in Kim Jong-un’s slush fund overseas. Jang’s ouster is viewed as Kim Jong-un’s complete consolidation of power in North Korea, or the beginning of Nicolae Ceausescu type process in North Korea.. 

Money may not be the real reason that got Kim Jong-un ticked off. Maybe it was Jang’s fear of losing Kim Jong-un’s confidence as No.2 status to his competitor, and his relentless effort to thwart the entry of Kim Jong-un’s best friend, Dennis Rodman? 

2) Kimchi got recognized by UNESCO

Kimchi, the spicy vegetable dish from Korea, and kimjang, the culture of making and sharing kimchi, have become UNESCO’s Intangible Cultural Heritage of Humanity on Dec 7.  Korea’s Cultural heritage Administration said UNESCO recognized kimjang represents Korea’s culture of sharing and networking ahead of winter and gives Koreans a sense of identity and belongingness through bonding and solidarity.  Kimjang takes place between Nov and Dec, and has been a way of preparing and storing nutritious vegetables for use during long winters.

  

While many foreigners have hard time eating kimchi due to strong smell, ex-Metaldyne employee David Killion was an exception. A great engineer with many patents, Killion fell in love with kimchi from his first visit to Korea in 2000. Korean consumers, however, tend to petition Korean government to block Killion’s entry to Korea as local kimchi price went up 40% each time Killion visited Hyundai R&D center.

2. Economy

1) CNN lists top 10 things Korea is known for

CNN listed 10 things that Korea “pulls off more spectacularly than anywhere else.” Here is the list.  1. Wired culture with 82.7% internet penetration. 2. Whipping out the plastic with 129.7 transactions per person in 2012.  3. Workaholics with 44.6 hours per week. 4. Business boozing 5.Innovative cosmetics 6.Female golfers 7.Starcraft. 8. Flight attendants 9.Blind dates 10.Plastic surgery.  Please click http://edition.cnn.com/2013/11/27/travel/10-things-south-korea-does-best/index.html?iref=allsearch as it would help you learn the reality in Korea.

 

On the plastic surgery aspect, you must respect Korean plastic surgeons who are better skilled than God. They can turn a Whoopi Goldberg into a Whitney Houston only after a few hours of knife works, just like what they did to 2012 Miss Korea Kim Yumi.

2) Good news with Korean export

President Park Geun-hye attended 50th anniversary of Trade Day event where three good news were announced. Korea became the largest exporter to China with $150 billion, beating out Japan for the first time. Korea reached $1 trillion in trade volume for 3 years in a row. Korea expects to see its largest trade surplus ever with $47 billion, by the end of the year. The Trade Day was started in 1964 by Park’s own father to celebrate the country reaching annual exports of $100 million for the first time. While Korea was the near bottom 90th exporter with products like plywood, wigs and iron ore in 1964, it is 7th exporter this year with semi conductors, mobile phones and cars for $562 billion export. 

 

Philippine was a dream country for Koreans in 1964 as Korea’s personal income was only about one tenth of Philippine at that time. Long line for  work visa application in front of Korean Embassy in Manila these days, however. Why the other way around in 50 years?  Philippine had a dictator Fernando Marcos whose interest was in the wealth of his family while Korea also had another dictator Park Jung-hee whose interest was in the wealth of his nation.  

3. Auto Industry

1) A Genesis for New Genesis

Hyundai launched New Genesis sedan with a plant to sell 62,000 units, a 35% up from the record 46,000 units sold in 2011. As Hyundai has seen its luxury sedan market severely eroded by imports, mostly by German models, Hyundai’s focus on New Genesis development was to benchmark German competitors. (Hyundai and its sister Kia’ sold only 10,264 Genesis and 4,497 K9(K900 in the U.S.) in the first 10 months this year while the combined sales of the BMW 5 Series, Audi At and Mercedes-Benz E-Class stood at 30,909 units.) The New Genesis will sell for between 46.6 million Won and 69.6 million won, and is thought be a mega hit so far with 8,000 units sold in a week. 

While New Genesis got much better than its predecessor in general, it is not so in fuel efficiency because of added weights with more functions and features. It got 135kg weightier than its old version, and even 200kg more with 4WD option. What should be on the desk of Hyundai engineers working for the next Genesis to launch in 2019? Jane Fonda’s Workout Book.

2) GM Korea under fear with no Chevy in Europe

GM Korea is getting a direct hit from GM’s recent decision to halt sales of Chevrolets in Europe from 2016. GM Korea manufactured 780K vehicles last year, and shipped 186K Chevy models to Europe, meaning 24 percent sales drop for GM Korea that will entail large layoffs.  GM Korea runs thee plants in Korea, and most of the Chevy models to Europe are produced at Gunsan Plant located 300km south of Seoul. Gunsan has a capacity to produce 260K units a year. 

GM is known as the company run by bean counters, and its ‘no Chevy in Europe’ decision was made because the bean counters were not happy.  What should be in the hands of GM Korea union workers and management? My Years with General Motors by Alfred Sloan. “The business of business is business.”

Regards,

H.S.

L2W - An American in NK, Catholic Fire, Hyundai H Cars

1. National

1) Another American held in North Korea

Merrill Newman, an 85-year-old Korean War veteran from California, has been held captive from Oct. 26 just before his plane was about to leave Pyongyang after private tour of North Korea. No reasons for arrest were explained by North Korea, but Newman’s son said there was “terrible misunderstanding.” It is reported Merrill Newman had a “difficult” discussion with North Korean officials about his experience during the Korean War. John Kerry urged North Korea to release the old man in an interview with MSNBC. Kenneth Bae, a Korean U.S. citizen, is currently serving 15 year jail sentence.

There has been at least six U.S. citizens held by North Korea since 2009, and North Korea thinks it fun to hold Americans as hostages. It took such hotshots like Jesse Jackson, Bill Richardson and Bill Clinton to fly to Pyongyang and take the U.S. hostages out. The latest Merrill Newman case must be taken as Kim Jong-un’s official invitation to Barack Obama for a baseball game in Pyongyang with Dennis Rodman.

2) A Catholic group under fire

A leftist Catholic group is facing criticism over comments by a priest who made supportive comments about North Korea’s deadly bombing on Yeonpyeong Island three years ago. Park Chang-shin, a priest of the Catholic Priest’s Association for Justice, delivered a sermon on Nov 22, saying “The Northern Limit Line was temporary drawn by the UN, and is thus not a military demarcation line at all. What should North Korea do if the Korea-U.S. joint military training continues on an island near the NLL? North Korea also should shoot them, and that was the bombing on Yeonpyeong Island.” Public anger raged soon after the sermon, and there was even a bomb threat on a cathedral in Seoul. The Catholic Priest’s Association for Justice has formed an alliance with the opposition party, repudiating the presidential election of Park Geun-hye last December.

Not clear on the impact of Park Chang-shin’s message? Imagine a clergyman in Ku Klux Klan insisting that Japan had every right to attack Pearl Harbor as the U.S. Navy was exercising around the island in the middle of the Pacific between the U.S. and Japan.

2. Economy

1) Final victory goes to Lockheed Martin

The Korean Defense Ministry announced its decision to buy F-35A fighter jets from Lockheed Martin under the F-X project for next generation fighters. The ministry earlier decided to purchase 60 F-15SE from Boeing because of budget limit, but it had to cancel it because of objections from Air Force generals who were concerned about the lack of stealth capability with the F-15SE. The initial purchase would be reduced to 40 jets to stay within the budget of 8.3 trillion won ($7.8 billion), and the first delivery would be made in 2018, a year later than the original time line.

Wonder how Boeing is feeling about Korean government that changed its mind for Lockheed Martin? It is booing.

3. Auto Industry

1) Hyundai to be first to sell hydrogen cars to the public

John Krafcik, CEO of Hyundai Motor America, announced the plan to sell Tuscon hydrogen fuel-cell vehicles from early next year, first in California, at LA Auto Show. Hyundai will offer $499 per month for 36 months including unlimited hydrogen refueling. Hyundai began manufacturing Tuscon, the world’s first hydrogen vehicle for mass-market, at its Ulsan plant last February, and sold a few dozen in Northern Europe where there is demand for zero emission vehicles. It can travel 483km (300 miles) on a single 5 minute charge and can reach speeds of up to 160 kph (100 mph). Hyundai Automotive Group is taking a two –track approach. Hyundai is for hydrogen fuel cell, and its sister is focusing on electric vehicles.

Though Hyundai has been talking about hydrogen fuel cell over 20 years, I had very shallow understanding of how it works. I just thought it dangerous because I kept thinking of hydrogen bomb. I learned lately that it is not so because hydrogen mixes with oxygen to generate electricity that powers electric motor to drive wheels. What’s the use of 27 years of automotive experience when it is not worth just 5 minute dive into hydrogen fuel cell theory?

2) Renault Samsung to make cars for Mitsubishi

RSM (Renault Samsung Motors) will supply two of its passenger car models from its Busan plant to Mitsubishi for U.S. market under the new alliance between Renault-Nissan and Mitsubishi to share products, technologies and manufacturing facilities. The first would be SM5 midsize sedan, the best seller of RSM. The 2^nd model has yet to be decided, but it is predicted to be smaller model SM3. The Busan plant is busy to prepare for the production of Rogue, 80K a year, to be sold under Nissan brand in the U.S. RSM has begun to take actions to make vehicles for someone else when its sales had fallen under 50 % of its 300K annual capacity last year.

Wonder why Mitsubishi is joining the Renault alliance? Mitsubishi has been going down so badly in the last 20 years, even falling behind Hyundai that it once taught how to make and sell cars, that it lost two of its three diamonds, thus perfectly matching with Renault’s log with one diamond.

Regards,

H.S.

L2W - UPP Disbanded, Soccer Gender?, & Export Record

1. National

1) Ultra leftwing party might be disbanded

Cabinet misters approved a motion to disband the Unified Progress Party, which has been criticized for advocating North Korean ideology and attempting to topple the government. The Justice Ministry “found the UPP’s doctrine, its political goals and activities violate the constitutional democratic order.” The ministry has being reviewing the motion since lawmaker Lee Seok-ki of UPP was arrested on charges of plotting to blow up major facilities in the event of war with North Korea. The Constitutional Court will decide within 180 days whether the UPP did violate the constitution. Five law makers in the UPP have shaved off their hairs to show their protest against the “government’s plot to kill democracy.”

The UPP lawmakers can shave their hairs for the show, but it wouldn’t work from my personal experience. Frustrated with two courses flunked at sophomore and a Dear John Letter from a girlfriend, I shaved off my hairs for the change in Feb 1982. It didn’t help much, though. I got another two Fs in the following semester, and had to wait five more years to meet a new girlfriend who later became my boss. 

2) Gender issue with a soccer star

The Seoul City women’s soccer team has condemned call for a gender test for striker Park Eun-seon, after the managers of six other teams in the professional league demanded the test and threatened to boycott the league. Park has scored the most goals in the league, leading Seoul City team in the top of the league. The general manager of Seoul City said the call to verify someone’s gender is a serious breach of human rights. Park was selected for the national women’s soccer team since high school, and went through a gender test when she competed in the 2004 Summer Olympics. Team coach said he would take Park to the hospital for another test.

Park looks like a man, quacks like a man, and plays like a man, then she probably is a man. Right?  No. She just has higher testosterone levels than other women. Another proof? She has taken shower with her teammates for many years. No one has complained or filed a lawsuit against Park.  

2. Economy

1) Japan’s Keidanren warns on Korean ruling

The Keidanren, or the Japanese Business Federation, issued a statement, saying the issue of compensation for conscripted Korean workers during Japanese colonial rule was already resolved in the 1965 settlement between Japan and Korea that normalized the diplomatic relations. The Korean court decision may become “an obstacle to the future investment in Korea, as well as lead to a freeze to bilateral trade,” said the statement. The statement came after a ruling in Korea that awarded 150 million each for four women who were forced to work at Mitsubishi Heavy Industries, and another ruling that ordered Nippon Steel to pay four of its former Korean workers with 100 million won. Japan paid total of $300 million, and another $200 million in low interest to Korea to the 1965 agreement to compensate for the damages done to Koreans during the colonial days. 

 

My great uncle was conscripted to Japanese Air Force at the age of 16, becoming a kamikaze stationed in Java, Indonesia. He barely survived the WWII as his final flight was scheduled to take off after Aug 15, 1945. Should the Japanese Air Force pay compensation if his family file and win a lawsuit in Korea?  What about my grandfather who had to work under a tough Japanese landlord? 

2) Monthly exports set a new record

Korea’s monthly export exceeded $50 billion for the first time in October, reaching $50.51 billion, up 7.3 % from a year ago, thanks to economic recoveries in the U.S. and the E.U. Exports to the U.S. rose 23.2%, thanks to increasing shipment of mobile phones and cars.  Korea’s trade surplus from Jan to Aug this year was $42.22 billion, while Japan’s was $41.53 billion.  It was the first time Korea’s trade surplus exceeded Japan’s in history. Japan was hit by the collapse of Japanese electronics companies, and rising oil imports to replace nuclear energy after tsunami in 2011

  

At the front of the trade surplus are Samsung Electronics whose operating profit is two times more than the combined profit of all of 9 Japanese electronics companies, including Sony and Panasonic, and Hyundai which is selling four times more vehicles globally than its former teacher Mitsubishi. It was the achievement as challenging as holding my wife from jumping into a Louis Vuitton store on sale.

3. Auto Industry

1) 80 millionth vehicles produced for Hyundai and Kia

Hyundai-Kia announced that the combined production of vehicles reached 80 million milestone last week. It took 50 years since Kia started K-360 three wheeled truck at its Sohari plant near Seoul in 1962, and 44 years for Hyundai which began to assemble Ford Cortina at its Ulsan plant in 1968. It took 30 years to reach 10 million in 1993, but 6 years to get to 20 million in 1999 and 4 years to see 30 million in 2003. With a new plant to open in China next year, Hyundai and Kia are expected to add 8 million new vehicles each year.  The all time best seller was Hyundai Elantra which sold 9.1 million units, followed by Hyundai Sonata with 7.73 million and Accent with 6.63 million. Kia became part of Hyundai when it was bought by Hyundai in 1998 after bankruptcy. 

The Korean automotive industry is quite young compared to other major nations. Myunghwa, a chassis and powertrain component supplier, was founded in 1957 and its founder is still busy taking care of production lines. Yusung, a supplier for piston rings and cylinder liners, was established in 1959 and its founder is as active in company affairs as in golf course. It is like Henry Ford’s friends are still running U.S. automotive suppliers in Detroit.

Regards,

H.S.

L2W: Dr. KJU, Elder Divorce, Korean Work Hours

1. National

1) Kim Jong-un gets honorary doctorate

U.S. magazine Foreign Policy reported that North Korea’s Kim Jong-un received an honorary doctorate in economics from HELP University in Malaysia. Paul Chan, the vice chancellor of HELP, said the university conferred the degree to Kim in recognition of his “untiring efforts for the education of the country and the well-being of its people.” HELP University is a private college in Kuala Lumpur founded in 1986. Lots of criticism is falling on HELP University .North Korea’s gross national income per capita, the indicator of standard living, was $1,250 in 2011, compared with $23,400 in South Korea, and chronic food and power shortages as well as human rights violations under Kim Jong-un are well known to the world.

 

Buoyed at the ‘Thank You’ comments from Kim Jong-un, Paul Chan of HELP University is about to give an honorary doctorate to Paris Hilton in recognition of her “untiring efforts for No Sex Before Marriage campaign.” 

2) Old couples divorce more than younger ones

According to the Supreme Court, out of 114,316 divorces last year, 30,234 or 26.4% were middle-aged or elderly couples, continuing the trend from 23.1% in 2008 and 24.8% in 2011. The number first surpassed 30,000 last year, overtaking the 28,204 divorces (24.8%) among younger couples with less than four years of marriage. Another study by Statistics Korea showed that women aged between 55 and 59 and men between 70 and 74 are the least satisfied with their spouse.  Kim Young-hee at the family court said the conventional wisdom that time strengthens the bond between the husband and wife no longer holds true. “Older people decide to divorce as they hope to spend their remaining years under some peace and tranquility,” said Kim. 

My 25 years of marriage was at risk recently when my wife learned I took a shower, not once, but twice, together with an attractive female colleague from Detroit a month ago. It was no use even if I kept explaining her million times it was the air shower before entering a clean room at a machine builder.

2. Economy

1) Koreans work 2nd most hours

The Korea International Trade Association reported South Korea ranked the 2nd among 150 nations in terms of per capita working hours in 2012, working 2,090 hours a year on average. Mexico was the first with 2,236 hours. The U.S. came in 12th with 1,790 hours and, what is surprising, workaholic Japanese ranked 15th with only 1,725 hours. The growth rate for labor compensation per hour was 9.8% in Korea in 2011, the highest among all countries. Growth in wages in the U.S. was only 2.2%. 

The KITA survey also showed Korea ranked 34th in the quality of life.  Koreans are so much used to long working hours that many feel uncomfortable about working less hours, and most of the foreign companies operating in Korea have hard time to force its employees to use up their annual leaves. Korean quality of life wouldn’t improve unless Koreans learn American idiom of “All work and no play makes Jack a dull boy.”

2) First nude beach planned for 2017

The Gangwon Province in upper eastern portion of South Korea said it plans to set up a nude beach by 2017 to boost tourism in the province. The province will select the site from recommendations or in competition next year, and will benchmark other popular nude beaches abroad.  The idea came from a successful annual mud festival in Daecheon beach in western coast that attracts millions of internal and foreign tourists every year. There was a similar attempt for nude beach in 2009, but the proposal failed due to concern on obscenity and perverts. Gangwon officials plan to avoid that issue this time, by opening the beach exclusively to foreign tourists. 

Gangwon should not worry about Koreans coming to the nude beach. I had taken showers with American soldiers while in the army (1982-1984), and doubt any Korean man would dare to visit the nude beach filled with Americans from what I have observed in the shower, which was not air shower.

3. Auto Industry

1) Korean auto suppliers supply to European car makers

Kumho Tire, Korea’s 2nd largest tiremaker and sister company of Asiana Airlines, announced its ‘Solus KL21’ tires will be fitted on Mercedes Benz luxury SUVs sold in Germany, Canada, Australia, Japan and the U.S. Kumho is the first Korean tire maker to work with Mercedes-Benz after supplying OE tires to it’s a-Class models in 2007. Samkee, a local diecasting and machining company, also announced that it will supply valve body for 7 speed Double Clutch Transmission (DCT) to Audi in China, which will generate 33 billion won in sales each year from 2016. The Audi deal was the 2nd business with VW Group after the contract with VW in March this year to supply 55 billion won worth valve body to VW China. 

  

Located in Pyeongtaek, Samkee also supplies machined aluminum housings to Metaldyne Korea for R engine BSM.  I often have dinners and fun time together with Mr.SH Kim, the CEO & owner of Samkee, at Hyundai suppliers association. It was very fortunate Mr. Kim decided to become a businessman, not a dancer.

Regards,

H.S.