Dark clouds hang over Ulsan

Dark clouds hang over Ulsan

By Andrew Browne

ULSAN, South Korea (Reuter): In his grand vision for Ulsan, general-turned-president Park Chung-hee spoke dreamily of a polluted city, of "black smoke belching into the sky to end South Korea's famine".

That was back in 1962 when memories of wartime famine and destruction were still fresh, and Ulsan was being transformed from a sleepy whaling port into an industrial hub.

A haze of pollution now lingers over the world's biggest petrochemical plant, the grandest shipyard of all time and the nation's largest autoworks.

But darker clouds lie on the horizon.

The industries that make Ulsan the country's premier industrial city are in trouble, and their armies of workers face an uncertain future.

With cities such as Ulsan in mind, the South Korean government last month tried to force through parliament a new labor law that would give firms greater power to hire and fire, making it easier for them to shed sunset industries and embrace new technologies.

Unions in Ulsan and elsewhere were furious and launched almost four weeks of strikes that helped persuade President Kim Young- sam to send the bill back to parliament for revision.

Ulsan Mayor Shim Wan Gu is one of Kim's closest political associates, and is related to the president through marriage.

"I worry that Ulsan could walk down the same road as Pittsburgh in the U.S., or Glasgow or Newcastle in Britain," said Shim, ticking off several cradles of the Industrial Revolution that slid into decline.

Shim boasts that when factory whistles blow in Ulsan to signal the end of the working day, more workers pass through factory gates than in any Asian city bar those in China.

Hyundai Heavy Industries employs 27,000 workers at its shipyard that operates a million-ton capacity dry dock and is able to build 23 ships of various sizes simultaneously. Its sister company, Hyundai Motor, has 29,000 workers on production lines.

Down the coast, Yukong Ltd daily spurts out 800,000 barrels of oil products with 4,000 workers.

But prices of ships are plummeting, South Korea's car market is saturated and Asian petrochemical markets are swamped with excess capacity. Other Asian producers with cheaper labor costs are quickly catching up with South Korea.

As he maps out plans for Ulsan into the next century, Shim sees manufacturing industry in decline. In its place will rise new industries in information, telecommunications and electronics.

"We hope Ulsan will emerge as the center of the Pacific Rim in the 21st century," said Shim.

Ahead lies wrenching industrial restructuring.

"We have already started to move some workers in shipbuilding to other departments in the company," said Chung Jae-hun a spokesman for Hyundai Heavy, which is moving into higher- technology production in areas such as engine turbines where its skilled workforce can create more value.

"Since 1993 shipbuilding has been suffering as orders for tankers have gone down," Chung said.

None of Ulsan's large companies will admit to any plans to trim their workforces.

"We're short of staff as it is," said Chung Jae-hun, a Hyundai Heavy management official. "We can move workers around within the company."

Ulsan workers profess not to be worried. "The company had ways to lay off workers even before the new law," said Hyundai Motor Co union leader Kim Ki-hyuk.

But such complacency may be misplaced.

Last week, South Korea's second largest steelmaker collapsed under a mountain of debt. Thousands of jobs are now in the balance at Hanbo Steel and its suppliers as banks desperately put together a rescue package.