South Korea’s biggest industrial companies are becoming more deeply embedded in global manufacturing just as labor tensions at home are becoming harder to ignore. The latest warning comes from POSCO, South Korea’s largest steelmaker, where workers have gone on strike for the first time in the company’s 58 year history.
The walkout follows a year of unusually visible labor disputes at some of South Korea’s best known manufacturers. Hyundai Motor, South Korea’s largest automaker, saw workers stage their first full strike in a decade in August, while Samsung Electronics, the country’s largest technology company and one of the world’s biggest chipmakers, came close to a major walkout earlier this year amid disputes over compensation. POSCO had largely stood apart from that history of industrial action until now.
That shift matters well beyond South Korea because Korean manufacturers are committing billions of dollars to production in the United States while becoming increasingly important to global automotive, semiconductor, battery and industrial supply chains. Just days before the strike, POSCO joined Hyundai Steel, Hyundai Motor and Kia in breaking ground on a $5.8 billion electric arc furnace steel mill in Louisiana. The plant is expected to begin commercial production in 2029 and supply automotive steel to Hyundai and Kia factories in the U.S.
There is no indication that the current strike will affect the Louisiana project or U.S. steel supplies. The significance lies instead in the pressure building inside Korean manufacturing companies that are simultaneously expanding overseas, managing weaker margins in some businesses and facing increasingly assertive demands from workers at home.
The POSCO union began a 48 hour partial strike at 7 a.m. on Sept. 9 after management and labor failed to narrow their differences during wage negotiations. The action covers a cold rolling line at the company’s Pohang steelworks and all lines at a pickling plant at its Gwangyang steelworks.
The strike remains limited enough that POSCO says steel production is continuing without significant disruption. The union said about 20 workers in Pohang and 100 in Gwangyang were participating, while the company said the number of employees who actually joined the strike was only in the dozens.
The risk could increase next week. The union has warned that it will begin another partial strike lasting 120 hours on Sept. 16 unless management presents a substantially improved proposal. Union Chairman Kim Sung ho said replacement workers could keep facilities running temporarily but argued that an extended stoppage would eventually begin to affect operations.
At the center of the dispute is a wide gap over compensation. The union is demanding a 7.1% increase in base wages, an incentive payment equal to 600% of a designated wage base, 50 POSCO shares for each worker and holiday bonuses equivalent to 200%.
POSCO has offered a 2.0% increase in base pay, an incentive of about $2,600, roughly $370 in regional gift certificates and expanded long service awards.
The disagreement reflects a broader strain emerging at some of South Korea’s largest manufacturers. Workers are pushing for higher compensation and stronger protections at a time when major industrial companies are spending heavily on overseas production, automation and new technologies while trying to keep costs under control.
POSCO faces an especially difficult version of that problem because its core steel business is under pressure. The company said operating profit in the first half of the year fell 43% from a year earlier and argues that meeting the union’s demands would add about $1 billion in labor costs.
The union says the conflict goes beyond wages. Workers have also raised concerns about staffing shortages, safety risks from aging facilities and compensation following the restructuring of POSCO Holdings, the holding company that oversees the steel group.
Those complaints help explain why a company that avoided strikes for nearly six decades has now reached the point of industrial action. What remains a relatively small disruption could become more serious if negotiations fail and the planned 120 hour strike goes ahead.
POSCO is trying to prevent that escalation. Chief Executive Lee Hee keun canceled a trip related to the Louisiana steel project and remained in South Korea to meet directly with the union chairman as the company sought a settlement.
The immediate question is whether POSCO can reach an agreement before Sept. 16 and keep production running normally. The broader issue is whether its first strike in 58 years proves to be an isolated dispute or another sign that labor relations are becoming a more significant operating risk for the Korean manufacturers playing a growing role in global supply chains.
