Archive for July, 2010

A civic organization member in support of the human rights of workers in the semiconductor industry holds a signboard during a one-person demonstration mourning the death Park Ji-hyeon, a Samsung Electronics employee who passed away due to complications from leukemia, in front of the Samsung Headquarters in Seoul‘s Seocho neighborhood, April 2.

By Heo Jae-hyeon

A number of people have come forward and claimed that Samsung Electronics has offered large settlements to employees and their families in order to persuade them to drop industrial accident claims. Employees filed the claims after contracting diseases such as leukemia while working in the company’s semiconductor and liquid crystal display (LCD) plants. Surviving family members of employees who have already died from diseases, as well as employees currently suffering from disease and their family members, have claimed that Samsung has offered hundreds of millions of won in settlements in order to persuade them to drop their industrial accident claims and terminate contact with civic organizations.

Meeting with journalists on July 5, the mother of Park Ji-yeon, an employee who died on March 31 after contracting leukemia in 2007 while working at a Samsung Electronics semiconductor plant, said that she received a settlement of around 400 million Won ($333,605) from Samsung in early April and that she dropped her industrial accident lawsuit in mid-May. Park’s mother, identified by the surname Hwang, said, “Samsung instructed me not to meet with groups like the Korean Confederation of Trade Unions and to move away so that members of civic organizations would be unable to contact me.”

According to accounts from her family members, Samsung Electronics secretly proposed the settlement to them just before Park passed away. Her case was in the middle of administrative litigation after the Korea Workers’ Compensation & Welfare Service (KComWel) ruled in 2009 that it would not recognize the case as an industrial accident.
“The settlement offered by Samsung Electronics was in the neighborhood of 400 million Won,” a family member said. “It included 380 million Won in pure settlement, including 50 million Won in insurance money, along with around 20 million Won in funeral expenses. As a condition for the settlement, Samsung asked that we give up the industrial accident suit and that we not have any contact with civic organizations.”

Park’s family faced a difficult choice. The costs of her two years and nine months of treatment alone was more than 100 million Won, and they were in debt by some 50 million Won. In the end, they decided to take the money offered by Samsung and drop the lawsuit. The money arrived in Hwang’s Nonghyup bank account on April 2, an hour before Park’s ashes were scattered in the waters off Sokcho. In her bankbook, the name of the sender was clearly printed out: “Samsung Electronics.”

Hwang felt belated remorse for taking the money from Samsung. After reaching the settlement amid a difficult situation, she canceled the lawsuit and cut off contact with the media, she said, but “after paying off all the debts incurred from her treatment, I felt empty inside, and I could not shake the feeling that I had let Ji-yeon down.”

“They gave us money in order to bury our child’s death away in the ground,” Hwang said. “If Samsung Electronics bears moral responsibility, it is only right for it to give consolation money, but why make us drop the industrial accident suit and prevent us from contacting civic organizations? They are using the weakness of poor people to buy them off with money in order to conceal the truth. We were used by Samsung.”

More accounts have surfaced to indicate that Samsung Electronics has persuaded not only Park’s family, but also other sick employees and family members of deceased employees to drop industrial accident claims. This fact was attested to in detail by the family members of Han Hye-kyeong, a 31-year-old Samsung Electronics LCD plant employee suffering from a brain tumor, and Yeon Jae-wook, a Samsung Electronics LCD plant employee who passed away in 2009 from a mediastinal tumor.

A Samsung Electronics official came to see Yeon’s family in mid-March, just after KComWel ruled that it would not recognize his illness as an industrial accident. His family was planning to continue the legal battle by requesting another KComWel judgment together with the civic organization Banollim. At that time, however, an official with Samsung Electronics’ Environment & Safety Group came by and offered to provide assistance with the industrial accident recognition process. The official also offered a settlement in the amount of 120 million Won. Yeon’s family turned the official down, however, and said they would request the judgment with Banollim. The visiting official said curtly, “If you work with Banollim, we cannot give you any money.”

Kim Si-nyeo, the 54-year-old mother of Han Hye-kyeong, received a similar offer in early June. She was called up with settlement offers by a Samsung Electronics higher-up and an ordinary employee whose names she does not recall. Kim currently endures very difficult living conditions, having moved not long ago from a 17 million Won deposit rental unit to a 5 million Won monthly rental unit in order to arrange the money for her daughter to receive treatment in her battle with a brain tumor. She also sold off the small restaurant she previously ran. Now she has no income. The settlement offer from Samsung was very tempting, but Kim turned it down.

“Samsung became a social problem, leaving my daughter exposed to that dangerous work environment, and its improper practice of trying to cover that up with money needs to be fixed,” she said.

Samsung Electronics has denied the recent flood of claims. A human resources team official who was in contact with Hwang refused an interview request from the Hankyoreh, calling it “burdensome.”

“It is true that we met with family members of people who were fighting disease or had passed away, but we merely discussed assistance with livelihood expenses, and we never told anyone to drop an industrial accident claim,” said the Samsung Electronics public relations office, who instead sent an e-mail response to the Hankyoreh. “We have recently, formulated criteria for assisting people in critical condition and are offering additional support.”

But the family members who met with Samsung officials tell a different story. Hwang said, “Samsung explicitly told me to drop the industrial accident suit, and I dropped it.”

“Samsung is lying,” she repeated.

“Samsung does not say outright that you cannot file an industrial accident claim,” said Yeon Mi-jeong, the younger sister of Yeon Jae-wook. “But what does it mean when they say they cannot give you consolation money if you file an industrial accident claim through a civic organization?”

Kim Ki-young, a former Samsung Electronics section chief who retired in early May after contracting Wegener’s granulomatosis, a rare disease, after working for around a decade as an engineer at the company, met on April 1 with a company official and a section chief identified by the surname Lee. Kim asked Lee, who was visiting him at his home in Yongin, Gyeonggi Province, to cooperate in his industrial accident claim. The response, however, was not favorable.

According to a recording of the conversation between Kim and the Samsung official, the latter recommended that Kim resign and said, “A condition of receiving consolation money is that you not file any civil, criminal, or administrative lawsuit.” Kim responded by saying, “It is an unfair demand to say that we cannot hold the company responsible for the disease any more after receiving recognition of an industrial accident.”

Why does Samsung Electronics have its feelers up over the question of the recognition of industrial accident claims by employees? According to Banollim, the company is engaged in “petty ploys” to conceal its industrial accidents. Labor attorney Lee Jong-ran said, “When Samsung outwardly says that it has faith in its plants’ safety, while secretly persuading people to take settlements, that is an attempt to cover up an industrial disaster.”

Kim Eun-gi, head of the KCTU labor safety bureau, said that having Park Ji-yeon’s administrative suit dropped was part of a carefully plotted strategy by Samsung Electronics. According to Kim, Park’s case had the highest odds of victory among the six employees who had received industrial accident non-recognition judgments in May 2009.

“Samsung probably took into account the effect it would have on the industrial accident claims of the other workers if Ms. Park’s case was recognized as an industrial accident,” Kim said.

Original article at: http://english.hani.co.kr/arti/ENGISSUE/74/430105.html

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By Kim Gyeong-lak

The Samsung Electronics semiconductor production line, which has been the subject of controversy due to a series of health complications including leukemia cases among its employees, will undergo a workplace environment investigation starting in mid-July. However, plans for participation by civic organizations like Banollim that have called on Samsung to take responsibility for the leukemia cases, as well as bereaved families of Samsung employees who died from the disease, failed to come to investigation.

Samsung Electronics announced plans Thursday to form an investigation team made up of some 20 industrial health researchers from South Korea and abroad and carry out a yearlong investigation of the semiconductor production line work environment beginning in mid-July. Samsung has been swept up in a firestorm of controversy over workplace environment hazards as some twenty employees who worked on the line over the past decade or so have developed leukemia or lymphoma. Ten of these employees subsequently died, according to Samsung Electronics.

The study is being led by Environ, an environmental health consultancy headquartered in Washington, D.C. Established in 1982, the company is considered an authority in chemical hazard assessment and environment hazard management, Samsung Electronics stated. Also participating in the study are researchers from U.S. public health graduate schools at Harvard University, the University of Michigan, and Johns Hopkins University, as well as researchers from the Korea Institute of Science and Technology.
Samsung Electronics said that it plans to examine the entire semiconductor manufacturing process to determine the presence of workplace environment hazards and carcinogenic materials, and to investigate the possibility of future illnesses.

“The study will also examine connections between the exposure to harmful materials on the production line and the duties of the people who became ill,” the company said.

Meanwhile, bereaved family members of deceased Samsung employees and groups such as Banollim that have made allegations about Samsung’s responsibility for the leukemia cases decided not to take part in the examination.

In April, Samsung Electronics said that if Banollim were to nominate a trustworthy organization, it would consider plans for including it on the investigation team.

Gong Yu Jeong-ok, an industrial medicine physician and Banollim member, said that she did receive a request for participation from a Sungkyunkwan University professor surnamed Kim, but she did not accept “because while Samsung was making requests for a joint investigation, at the same time it was doing what amounted to buying off the family members of the victims.”

The group leveled allegations earlier this month that Samsung Electronics has been persuading the family members of victims to drop their industrial accident lawsuits by offering them considerable sums of money.

See original article on The Hangyoreh website: http://english.hani.co.kr/arti/english_edition/e_national/430663.html

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Translation of speech by Jung Ae-jung, wife of leukemia victim Hwang Min-woong, at anti-Samsung protest, 30 July 2009:

I believed in Samsung.

Samsung was my future, and and the hope of our family.

Whether it was day or night we didn’t care and we thought it was almost a sin to be absent, we worked so sincerely, even as the work got harder. We thought, that’s the least we should do for the hope of our family – Samsung. Even with the sharp chemical smell stinging our noses and the high air pressure making us exhausted, I had pride in this job, which was my first job. For me, Samsung was a place like that.

It was, until my husband fell victims to leukemia.

Though I believed in Samsung.

I thought it would be the basic minimum, to inform us through education of why there was a nauseating chemical smell, and the effects on the body of noise and vibration. I thought at the least, the company could let us know that high air pressure could cause legs to swell, and cause some people to have nose bleeds, and that all these could cause huge stress to a person, and could lead a person to become ill of disease.

I thought at the least, the company would inform us that there is a manufacturing process using radiation, and inform us what radiation is, what the chemicals and gases being used are, how harmful they are to our bodies, and whether the workers on the site are being paid highly for hazard allowance.

I was a fool to believe in Samsung.

It was wrong to put a person in charge of occupational safety who is only concern about personnel transfer and knows nothing about the chemicals used at the workplace.

It was wrong to make workers use chemicals without any instruction about them, chemicals that are labelled with stickers only in English and no Korean translation.

It was wrong to to legitimize abusing wages, by introducing a promotion test system for the first time to women workers just as they are gaining seniority and due to have higher wages. Even more dumbfounding than this, saying that the work was hard even if the worker was educated, and then giving exams to the men and women workers on semiconductor theory and practice, specialized theory of each manufacturing process, common knowledge of semiconductors, general knowledge, business vision of the company… all this only serves to trifle with and mock the workers at the site.

It was wrong to make pregnant women write consent letters just to avoid the letter of the law and make them work on the night shift in a special environment that would be hard even for normal people, regarding them as one regular person on the line and even creating a maternity anti-dust uniform for them – though it would be tough on the expecting mother and also create hardship for her colleagues who would want to protect her. It was even more wrong to regard the provision of that special uniform as a benefit provided by the company, and take credit for it.

It is wrong, when women workers of child-bearing age had irregular menstruation and high miscarriage rates, to smooth it over with words saying that it only appeared to be relatively high rates of these problems.

It is wrong to focus just on meeting production targets, and insist on overtime work on work days and holiday, threatening that refusal would be reflected in workers’ evaluations – affecting their bonuses and promotion.

It is wrong, if the owner is human at all, to not purchase equipment for robots to automatically operate but instead to make operators keep operating equipment manually that exposes them to chemicals.

No matter how it hurts the company image or harms the business, it is really wrong to flick off like flies, the employee who are dying and suffering in numbers, from leukemia, rare diseases, and women’s diseases.

It is really wrong that Samsung whom we trusted, has done all this to us!

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By Gwak Jeong-soo

“Hyundai Motor is racing ahead at full speed with no brakes.”

“Samsung Electronics has had its greatest renewal in history.”

Not long ago, the press showered praise upon Samsung Electronics and Hyundai Motor as they announced their 1Q10 results. Since the second half of 2009, the two companies have been setting and breaking quarterly records. Perhaps thanks to their efforts, South Korea’s economic results have been enough to make the nation the honor student even among the members of the Organisation for Economic Co-operation and Development (OECD), the organization for advanced nations.
At the same time, however, some concerned observers have begun to ask whether this praise is truly warranted. According to these observers, we should not let ourselves be dazzled by the outwardly impressive numbers, but instead turn our attention to the suffering of the many small and mid-sized companies hidden in the shade of these major corporations.

“Major corporations have been producing their greatest results ever, registering double-digit profit margins since the second half of 2009, but the small and mid-sized subcontractors doing business with them are unable to achieve profit margins of even 1 to 2 percent,” said a Mr. Lee, the president of an electronics and automobile parts producer in Incheon.

In order to uncover the real face of the polarization between large and small companies, the Hankyoreh 21 placed under the microscope South Korea’s leading companies, Samsung Electronics and Hyundai Motor, and the subcontractors that are doing business with them. The weekly magazine compared first quarter results for 2007, just before the global economic crisis struck, 2009, when the recovery began and 2010, when the growth trend continued to accelerate.

The subcontractors examined were the 755 of the roughly 1,000 small and medium-sized enterprises (SMEs) doing business with Samsung Electronics and Hyundai Motor for which objective financial information could be verified. Of these 755, a total of 498 were doing business with Samsung Electronics and 257 with Hyundai Motor. The magazine’s efforts to confirm company financial information were assisted by the Korea Information Service, a corporate information database.

The analysis showed that polarization between the large companies and the subcontractors was far greater than expected. While the contracting companies were boasting of double-digit profit margins in 2010, many parts companies were languishing at one-quarter the returns of the major company on average and had yet to return to pre-crisis levels. Naturally, the gap between the contracting and subcontracting company had grown wider than its status before the crisis struck.

In the case of the operating profit margin, a company profitability indicator calculated by dividing operating profits by sales, Samsung Electronics and Hyundai Motor respectively recorded profit margins of 8.23 percent and 7.01 percent for 2009. For Samsung Electronics subcontractors, however, the profit margin was 5.66 percent on average, and for Hyundai Motor subcontractors it was just 2.48 percent. The gap widened further in the first quarter of 2010. Samsung Electronics and Hyundai Motor leapt up to 14.56 percent and 8.35 percent, respectively, but Samsung Electronics subcontractors actually dropped from 2009 to 4.87 percent. Meanwhile, Hyundai Motor subcontractors recorded 4.62 percent, a higher value than in 2009 but still half that of the contracting company. The differential between contracting company and parts company for 1Q10 was 9.79 percentage points for Samsung Electronics and 3.73 percentage points for Hyundai Motor, far greater than the respective tallies of 2.9 percentage points and 3.01 percentage points in 2007.

The situation is the same with the net profit margin, another profitability indicator calculated by dividing net profits by revenue. Samsung Electronics and Hyundai Motor recorded net profit margins of 6.92 percent and 9.3 percent, respectively, for 2009. In contrast, Samsung Electronics subcontractors recorded 3.12 percent, and Hyundai Motor subcontractors just 2.73 percent. For 1Q10, both Samsung Electronics and Hyundai Motor rose into the double-digit range, with net profit margins of 12.78 percent and 11.39 percent respectively. Their subcontractors, however, actually dropped in net profit margin, as Hyundai subcontractors came in at 0.16 percent and Samsung subcontractors at 3 percent.

In 2007, the gap between contracting and subcontracting companies was 6.82 percentage points for Samsung Electronics and 2.49 percentage points for Hyundai Motor, but in January of 2010 it had risen to 9.78 percentage points and 11.23 percentage points, respectively. The profit margin and net profit levels for subcontractors at the time totaled just 3 to 6.5 percent of their pre-crisis totals.

Also demonstrating the severity of the polarization is the revenue growth rate, an indicator of company growth that represents the ratio of current year revenue growth to revenue for the previous year. For Samsung Electronics and Hyundai Motor, those values were 23.06 percent and -1.03 percent for 2009, but their rise in 1Q10 was explosive, with Samsung Electronics registering 33.45 percent and Hyundai Motor 39.56 percent. Meanwhile, parts companies fell far short of their contracting company, with Samsung’s recording revenue growth of 5.24 percent, and Hyundai’s down to -4.58 percent.

The polarization between larger and smaller companies evident in sales and profit statistics. Hyundai Motor sales rose by 1.57 trillion Won ($1.3 billion) in 2008, but sales by subcontractors rose just 44.6 billion Won. In 2009, Hyundai Motor sales dropped by 330 billion Won, but its parts suppliers’ sales plummeted by 936.4 billion Won. When subcontractors enjoyed increases, it was a fraction of those seen by the contracting company, and when their profits dropped, the fall was several times that of the contracting company.

A comparison between the operating profits of Samsung Electronics and its subcontractors also reveals noteworthy results. Samsung Electronics operating profits underwent a rapid drop in 2008, the year the crisis struck, falling by 1.8 trillion Won. In contrast, its subcontractors enjoyed an increase of 203.8 billion Won. In 2009, when the recovery began, the situation made a 180-degree turn, with Samsung Electronics’ operating profits leaping up by 3.25 trillion Won and subcontractor profits falling by 154.1 billion Won. The situation has been a feast for the large company and a funeral for the subcontractors.

Please direct questions or comments to [englishhani@hani.co.kr]

(This is one of two articles in a series.)

See original article at: http://english.hani.co.kr/arti/english_edition/e_business/429935.html

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By Gwak Jeong-soo

South Korea’s favorable economic ratings despite the difficulties experienced by small and medium-sized companies are due to the relative importance of major corporations like Samsung Electronics and Hyundai Motor. The two companies posted exports last year totaling 74.8 trillion Won ($62.5 billion) and 15.8 trillion Won, respectively. Together, they accounted for 19.2 percent of South Korea’s total exports of 460.9 trillion Won. The two companies’ sales of 121.7 trillion Won also accounted for 11.45 of South Korea’s GDP. The optical illusion caused by the deepening of the economic concentration of large corporations is hiding the seriousness of the polarization between large and small and medium-sized businesses.

There are conflicting answers from large and small to medium-sized businesses as to the reason behind the polarization. Subcontractors claim that the main reason is that major companies do not guarantee optimum returns to them.

“Major factors for subpar returns include not only unreasonably lower delivery unit costs, but also the serious issue that the prices do not properly reflect factors such as the rise in the international prices of raw materials,” said a Mr. Lee, the president of a car parts manufacturer in Incheon.
Others say major corporations do not keep pledges made with the government.

“When we meet with the president at Cheong Wa Dae, the chairmen of major corporations promise to show consideration for small and medium-sized businesses, but the reality is completely different,” said the president of another industrial company. “Primary subcontractors directly dealing with major corporations make about 1 to 2 percent profit, but secondary and tertiary suppliers are running virtually in the red.”

Samsung, however, has a contrasting view of the situation.

“Since the global market price of each part is transparent and open, the reality is that we cannot show preferential treatment to domestic parts producers,” said Ha Joo-ho, a member of Samsung Electronics’ public relations team. “If we buy domestic parts at a higher cost, it will cause arguments over fairness. Samsung, as a global leader, offers its products at prices higher than competing firms, so it has the wherewithal to be a bit more generous with its unit prices for delivered parts.”

Yeon Tae-gyeong of Hyundai Motor’s public relations team found the cause in the business environment, noting that carmakers did so well last year because of good exports and internal demand due to rise in the exchange rate and tax support.

“Out of consideration of the environment, Hyundai recently decided as a group to sign production and fair trade agreements with about 2,700 small and medium-sized businesses, including primary, secondary and tertiary subcontractors and boosted plans to support them,” said Yeon.

The trend in the unit price of delivered goods since the economic crisis lends strength to the claims of small and medium-sized businesses. Since the first half of 2008, the international price of raw materials has skyrocketed, but firms producing finished goods have ignored demands by subcontractors to raise unit prices. When parts producers have strongly protested, threatening to suspend production, the major firms accept only half of the demanded price hike.

As the economic crisis took full root in the second half of the year, however, measures were taken to lower the unit price of parts, canceling out most of the rise of the first half of the year. They have had to bite the bullet at the coercive attitude of auto corporations, who tell subcontractors to quit delivering goods if they do not like the price offered.

“In 2009, carmakers did not lower their parts prices, at least nominally, and the rise in personnel and electricity costs were also not reflected in parts prices,” said Heo Man-yeong of the Korea Foundry Cooperative Association. “Carmakers have said that they will reflect the rising international price of raw materials in their parts quotes, but they calculate the unit price based on major parts producers who procure their goods at relatively low prices, so small to medium-sized businesses have no choice but to incur losses.”

The government has announced a plan to cultivate some 300 rising small and medium-sized companies as “hidden champions” by 2020 to boost employment, but there has been criticism that in the current reality, this is like seeking a fish from a tree.

Yunhan University President Kim Young-ho said small and medium-sized businesses account for 99 percent of all companies and 88 percent of total employment, but make just 2 percent of profits in subcontractor deals with major companies. If this continues, most will die within in three to four years.

Small and medium-sized businesses agree that the rise in raw material prices must be properly reflected in the delivery costs per unit. They also say it is urgent to change the system in which major companies monopolize profits.

Kim Seong-su, president of electronics partsmaker Seoo Telecom, said “Side-by-side development of major and small to medium-sized businesses is urgent for national development, but the current structure is one in which major corporations are monopolizing returns and small to medium-sized companies are virtually working as farmhands.”

Please direct questions or comments to [englishhani@hani.co.kr]

(This is the second of two articles.)

See original link at: http://english.hani.co.kr/arti/english_edition/e_business/429936.html

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