​Leeno Industrial Considers Rotating Leave as Orders Fall After Strike

Busan-based semiconductor component maker Leeno Industrial is facing the aftermath of a strike, with rotating leave for employees being considered next year. The prolonged labor dispute led to customer defections and prevented the company from securing orders for next year.

​According to industry sources on Oct. 7, Leeno Industrial is considering rotating leave as production volumes decline. The company is believed to have insufficient work relative to its production workforce. No formal decision has been made on the leave, and the duration, eligible employees, and pay arrangements have yet to be determined. Discussions remain at an early stage.

​Leeno Industrial typically reflects volumes agreed with customers in production about six months later. September was the final window to secure production volumes for the first half of next year. As the labor dispute remained unresolved at the time, the company could not provide delivery schedules to customers, preventing contracts from being finalized.

​The labor and management sides held last-minute negotiations on key issues involving wages and the collective bargaining agreement under mediation by the Ministry of Employment and Labor on Sept. 8. The company offered to introduce annual regular bonuses of 9 million won, pay performance bonuses equivalent to 300% of first-half wages, and provide a one-time special bonus of 2 million won this year. The concessions were aimed at reaching a settlement quickly and securing customer volumes, but the two sides failed to reach a final agreement.

​The labor and management sides have different views on the cause of the breakdown in negotiations. The union claims that the company's chief negotiator overturned language that had been finalized by the labor and management negotiating committees. The company argues that the language was revised during the process of coordinating the agreement before final signing and should not be regarded as a reversal of an agreement. The company maintains that negotiations broke down because the union rejected its final offer.

​The full-scale strike, which began July 23 and lasted about two months, ended Sept. 23. The prolonged unpaid strike increased the financial burden on union members. Most union members, excluding four union officials including the branch chairman, vice chairman, and secretary, returned to work without a separate settlement payment or an agreement on wages and the collective bargaining agreement.

​However, during the strike, most of the volumes previously supplied by Leeno Industrial shifted to competitors including Japan's Yamaichi Electronics and Yokowo, as well as Taiwan's Winway. Unable to meet delivery schedules, Leeno Industrial suggested that customers consider alternative suppliers. The company supplies test sockets and metal pins used for inspection to global logic semiconductor companies including Nvidia, Qualcomm, and Broadcom. Even after production resumed, the decline in orders has left the company without the overtime and holiday work that would normally have been expected during a semiconductor upcycle.

​A Leeno Industrial official said, "If volumes are transferred to competitors and they become capable of producing even the high-difficulty products for which Leeno Industrial has differentiated capabilities, we could be completely excluded from customers' supply chains." The official added, "Even after production is normalized, it will take considerable time to regain customer trust and recover the volumes that have been lost."

​Labor negotiations are expected to remain protracted. The two sides held their 12th round of negotiations on Oct. 6 but failed to reach an agreement. The 13th round is scheduled for Oct. 13. The union says negotiations should resume based on the terms proposed by management during special negotiations. The company argues that those terms were prepared on the assumption of an early settlement and a normalization of production, and that the issues should therefore be discussed from scratch. The union has also left open the possibility of partial strikes depending on the progress of future negotiations.

​The labor dispute is also affecting the relocation to Leeno Industrial's new plant in Busan's Eco Delta City. Leeno Industrial is investing about 200 billion won to build a new factory that is twice the size of its existing plant. The company originally planned to complete construction in November and then proceed with permits and equipment relocation. The prolonged labor dispute has pushed the full-scale relocation schedule to the second half of next year.

​Leeno Industrial plans to reorganize its production and management systems and work to restore customer confidence. One option under discussion is for labor and management to jointly announce their commitment to normalizing production and preventing a recurrence after reaching an agreement on wages and the collective bargaining agreement.