Long unemployment lines are filled with former factory workers, all complaining about their
jobs being shipped overseas by companies who will hire foreigners to do the same work for
much cheaper.
Back home, families struggle to re-adjust to the collapse of tens of thousands of once-prosperous
and high-wage factory jobs, prompting many to simply pack up and leave to a different
part of the country in hope of finding work- any work.
But this isn't the Rust Belt of 1970s and 1980's America, this is Ulsan, South Korea,
and this is happening today.
You might know Hyundai from their automobiles, but that's just part of a company that spans
several different markets.
One of those key markets has for decades been the construction and manufacturing of cargo
vessels and offshore oil and gas platforms.
Globalism may have seen a collapse of the manufacturing job market in places like the
US and Europe, but it also dramatically increased international trade, and with billions of
tons of goods being shipped around the world, for decades the demand for huge sea-going
cargo vessels made Hyundai a very rich company.
Add to that the explosion in offshore drilling for oil and natural gas, and Hyundai could
barely keep up with demand.
Yet today Hyundai's huge manufacturing yard in Ulsan, South Korea, where many of the world's
largest vessels were constructed is mostly quiet these days.
The demand for large cargo vessels and offshore platforms is just as big as ever, but South
Korea's rapid modernization saw legislature that increased benefits mandated by law for
workers, and unions banded together to demand fair wages for workers taking huge risks in
dangerous construction.
Like dozens of American and European companies before it, Hyundai simply decided that the
cost of building things at home was too high, and so began to move its operations overseas
to countries with little regulation to protect its workers, where those same workers could
be paid less and compensated little for injuries and accidents.
For workers in Ulsan they could expect to make triple South Korea's annual average working
at one of Hyundai's ship yards or auto factories, but starting in 2015 27,000 workers began
to be laid of by Hyundai.
Many of these workers were then forced to take minimum wage jobs to support their families,
or simply try to move and find work elsewhere in the country.
Whereas Ulsan used to be South Korea's richest city in 2007, today it is the nation's most
rapidly aging city as people move away in search of better opportunities.
For those that stay, the suicide rate is incredibly high, with the country's highest suicide rate
for people aged between 25 and 29 years old.
In the first half of 2018, the city saw 182 suicide attempts, compared to 150 a year earlier.
With the rising suicide rate, taxi drivers have been instructed not to drop people off
on Ulsan's newly built bridge which spans its bay, after three individuals killed themselves
there in just one month.
Suicide prevention specialists say that people bought into the fantasy that if they worked
hard and studied hard they'd be better off, but with an exodus of jobs, that fantasy has
turned into a nightmare of hopelessness, where killing one's self seems to be the only option
for many.
But what exactly went wrong with Hyundai to bring South Korea's crown jewel to such an
impoverished state?
Some blame unions and rising labor costs for Hyundai's decision to move operations overseas,
and while this did have some bearing on the situation, it's simply not an overwhelming
factor in Hyundai's decision.
As nations modernize and living standards rise, their work forces tend to unionize and
demand more benefits and fairer compensation- this cuts into a company's profits by raising
the cost of labor.
Opponents of unions in both the US and Europe have long demonized the organizations, blaming
them for the loss of the high-wage manufacturing jobs they were fighting to protect.
Yet with access to markets around the world and greatly efficient manufacturing techniques,
the cost of a fair-wage labor force is miniscule for a company whom manages their business
and finances well.
And this is where Hyundai has failed at repeatedly.
Industry experts point at Hyundai's inability to handle competition from China, and a deep
complacency and risk-aversion that comes from Hyundai's near-monopoly on South Korea's shipbuilding
and car manufacturing.
That complacency and risk-aversion shouldn't come as a surprise, given as Hyundai is just
one of a handful of 'chaebols', or family-run companies who have near complete domination
of their respective markets.
With little competition to fear, these chaebols have lapsed into a deep complacency, and believing
their profits to be secure, refused to take risks that companies facing fierce competition
are forced into- risks that often see major market breakthroughs.
In short, Hyundai has long dominated in South Korea, and failed to address international
competition.
It's short-sightedness also came in the form of missing out completely on the USA's SUV-boom,
with its auto branch joining the SUV game too late in the game to remain a sales leader
in America.
Hyundai also failed to take risks in the electric car boom, and now faces stiff competition
and an uphill battle when facing off against competitors who are now prominent names in
electric cars.
Ulsan's woes however aren't completely Hyundai's fault.
South Korea's overreliance on exports to power its economy has seen it become very vulnerable
during a time of growing protectionism in the US, China, and other nations, as well
as leaving it vulnerable to other international shocks.
When the confidence or purchasing power of consumers in the foreign markets it depends
on so much is shaken, South Korea's exports fall dramatically, which has a huge effect
on its economy.
Once more, South Korea's chaebols routinely hold the nation back, and their near complete
monopolies place the nation in serious economic jeopardy.
Should one chaebol collapse or falter, as Hyundai has faltered, it has huge repercussions
across the nation- in South Korea the top 10 companies have revenue equivalent to 66
percent of the country's gross domestic product in 2017, that's compared to America's top
500 companies earning 65 percent of the US's GDP.
As the world continues to grow more protective of domestic industries, thanks in no small
part to the US/China trade war, South Korea forecasts that its export growth will slow
to 2.5 percent in 2019, down from 15.8 percent in 2017- a difference of tens of billions
of dollars.
While Hyundai claims that it will hire tens of thousands of new workers for its auto plants
to make up for the losses in its shipyards, Hyundai has already moved significant production
offshore to cheaper markets and domestic output is expected to hit 37 percent, down from nearly
80 percent in 2004.
Ulsan's story is one many Americans living in the Rust Belt are familiar with- once prosperous
communities suddenly find that the jobs they've relied on for decades are being shipped overseas
where labor is less protected and cheaper.
Globalism may have connected the world and helped ensure world peace by promoting international
trade, but it has also decimated the industrial sectors of many first world nations.
Yet as South Korea has shown us, as more of the former cheap labor markets start demanding
fairer wages and benefits for dangerous work, manufacturers are going to start running out
of places to find cheap workers to exploit.
Many African and South Pacific nations, sanctuaries of cheap, easily exploited labor for decades,
are even now enacting stronger worker protection laws and instituting minimum wage laws.
One day these exploitative companies will simply have no cheap labor markets to flee
to, and be forced to return home.
Unfortunately for millions around the world, that homecoming is going to come far too late
to matter anymore.
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