After coming out of a long slump, the nation’s leading steelmakers are now gearing up to rebound once again. However, smaller companies in that industry are still suffering from weak profit and excess market competition.

This is especially so for SeAH Steel and Hu Steel, two mid-sized steelmakers that are undergoing or facing an unprecedented walkout.

SeAh Steel, affiliated with the nation’s 40th-largest conglomerate SeAH Group, has been hit by a 30 percent cut in production since its labor union officially announced a strike on Tuesday.

The company has been jolted by labor disputes since May, triggered by the union’s uncompromising demand for a salary increase.

After months of fruitless negotiation, the union late last month decided to withdraw from the Federation of Korean Trade Unions and to join the more progressive Korean Confederation of Trade Unions.

The company, in response, shut down the major manufacturing sites, pledging to end the union’s excessive calls.

“The union is demanding an 8.8 percent salary raise but this is unreasonable, considering the ongoing slump in the entire steelmaking industry,” said an official of the company.

“It is the company’s proposal to maintain the current salary level but to make adjustments in the incentive sector, instead.”

Hu Steel, a specialist in steel pipes, may also face an all-out walkout for the first time in 17 years as the management and labor union have so far failed to find a point of compromise.

The union is currently staging a partial strike, during commuting hours and lunch time, asking for a 6 percent salary raise and a 200 percent premium for overtime labor, but the management pinned the raise to 5 percent and the premium to 160 percent.

“These mid-sized steelmakers make up a considerable part of the local industry. Their walkout, if prolonged, will deliver a visible blow to the entire industry,” said an official of the Korea Iron & Steel Association.

In contrast to the production drop of the runners-up, the nation’s top-ranking steelmakers are experiencing a production surplus.

The second-largest player Hyundai Steel, affiliated with Hyundai Motor Group, recently kicked off its third blast furnace, which will add some 12 million tons of crude steel to its annual production capacity.

The No. 1 steelmaker POSCO, too, wrapped up the construction of its 4.2-million-ton-capacity blast furnace in Gwangyang, South Jeolla Province, while continuing to build new overseas manufacturing sites throughout Asia.

Though both pledged to invest in technology and pioneer new markets, they are inevitably to conflict in the special-steel market due to excess supply.

Currently, the world’s steel industry has a total production capacity of about 2 billion tons, but 500 million tons are in surplus due to the global economic slump and oversupply.

By Bae Hyun-jung (tellme@heraldcorp.com)