The labor union of Korea Aerospace Industries (KAI) (047810) on Monday strongly protested Hanwha Group's move to expand its stake in KAI and participate in its management.
In a statement issued that day, the KAI union said, "We can never tolerate a competitor's attempt to participate in management," adding, "We will strongly block any expansion of influence over core decision-making structures, including board participation, personnel intervention, and involvement in business direction." The statement marks the first official position from the KAI union, coming three days after Hanwha Aerospace (012450) purchased additional shares in KAI on Friday and officially changed its purpose of holding from simple investment to management participation.
The KAI union further stated, "Should the attempt to acquire (management control) through (additional) stake expansion become a reality, we will mobilize every available means to protect KAI's independence and industrial foundation." The union explained that if Hanwha pushes ahead with its management participation attempt despite the union's opposition, it will not rule out outdoor rallies against Hanwha or the government (the Export-Import Bank of Korea).
The KAI union characterized Hanwha Group's move not as a simple investment act but as an infiltration of control over KAI. The union said, "KAI and Hanwha have competed for contracts and leadership in the same defense market," pointing out that "if a competitor participates in management, a structure will inevitably be created in which core information such as business strategy, order plans, and R&D direction is linked to external interests."
The KAI union also raised the possibility of conflicts of interest. "From the moment a competitor enters the internal decision-making structure, it becomes difficult for KAI to make independent and free judgments," the union said. "KAI's direction will inevitably be swayed by the competitor's interests."
The KAI union said, "The structure linking Hanwha Aerospace, Hanwha Systems, and Hanwha Ocean already forms vertical integration across the entire defense industry," expressing concern that "if KAI is also brought under this sphere of influence, a weakening of market competition, expansion of internal transactions, and distortion of the industrial ecosystem will be inevitable." The union warned, "Ultimately, KAI will be reduced to a structure under the influence of a specific group rather than an independent systems integrator."
