In 2025, Donald Trump returned to the White House as the President of the United States and declared a tariff war, advocating for the resolution of the trade deficit and the revival of manufacturing. As a result, the U.S. protectionist stance has strengthened further, causing significant turmoil in international supply chains. Given the current situation, which is expected to have serious effects on the South Korean economy, heavily dependent on exports to the United States, how should our corporations respond? The Netflix documentary 'American Factory' (2019), which is known to have the support of former President Barack Obama and his wife, provides important implications on this question.
The documentary begins with the scene of the General Motors (GM) factory in Dayton, Ohio, a U.S. 'Rust Belt' region, closing its doors on Dec. 23, 2008 (local time). More than 10,000 jobs are lost due to the factory closure, devastating the local economy. In 2015, the Chinese auto glass manufacturer Fuyao decided to establish 'Fuyao Glass America' at the site of the closed GM plant, signaling its decision to manufacture in the U.S. This was a strategic choice to reduce tariff burdens while targeting the local market. Initially, local governments and residents welcomed Fuyao's entry into the U.S. with expectations of new job creation. However, problems arose as Fuyao insisted on using Chinese management methods without considering the American labor culture and business environment. The clash between Chinese efficiency-centric management and the U.S. culture that emphasizes safety and labor rights led to decreased productivity and serious labor-management conflicts, resulting in a fractured relationship between the corporation and the local community as workers faced job insecurity.
Changing production strategies and the need for localization
As the U.S. imposes high tariffs on Chinese products, Chinese companies have adopted a strategy of increasing investments in U.S. manufacturing. Fuyao also attempted to secure a foothold in the U.S. market through this strategy. However, the inadequate consideration of U.S. labor culture and management practices became problematic. Ultimately, as Fuyao maintained its Chinese management style, labor-management conflicts emerged, and productivity declined. In contrast, Toyota serves as a representative example of successfully implementing a localization strategy. When they established their first factory in Kentucky in 1986, Toyota emphasized collaboration with local workers and adopted team-centered work practices, successfully settling in. They also enhanced worker capabilities through continuous training and built trust between labor and management. As a result of these efforts, Toyota Motor Manufacturing Kentucky (TMMK) has become a core part of Toyota's global production network. These two cases illustrate that in the era of protectionism, for corporations to succeed, they must build production models optimized for local markets rather than simply relocating production bases.
Adjusting labor management practices and the importance of labor-management cooperation
Fuyao attempted to maintain its Chinese management style even in its U.S. factories. However, American workers value a five-day workweek, designated break times, a working environment that prioritizes safety and welfare, and see union activities as an important right. Yet Fuyao did not accept these differences and instead sought to prevent union formation due to concerns over rising operational expenses. This action triggered strong backlash from workers and intensified the conflict. Workers wanted more than mere job retention; they desired a balance between work and life. By persisting with a management style that ignored this, Fuyao faced serious resistance from its workers.
In contrast, Toyota prioritized building trust with workers when entering the U.S. market. They actively improved local labor conditions and strengthened labor-management cooperation by providing continuous education and opportunities for participation. These efforts led to enhancements in productivity and quality, ultimately becoming key factors in the corporation's competitiveness. As of 2025, TMMK produces various models, including the Camry, Avalon, and Lexus ES, establishing itself as a core hub of Toyota's North American production. For global corporations to succeed abroad, it is essential not only to comply with local laws but also to respect the values and cultures of local workers and integrate them into their management strategies.
Technological innovation and cooperation with workers
To address high labor costs and low productivity issues at its U.S. factories, Fuyao implemented automation but faced strong resistance from workers. Fears of mass layoffs deepened labor-management conflicts and negatively impacted business operations. This case highlights that while technological innovation is essential in an increasingly protectionist environment, failing to cooperate with workers can lead to crises.
Corporations must build sustainable employment models by promoting technological innovation while also providing retraining and job transfers for workers. Toyota, alongside the introduction of automation, offered workers opportunities to acquire new skills, successfully achieving improvements in both productivity and job security. In contrast, Fuyao's lack of communication with its workers led to technological innovations resulting in decreased productivity and increased conflict. This indicates that for corporations to succeed in technological innovation, they must closely collaborate with their workers.
Flexibility in organizational operation
The Fuyao case shows that failing to adjust organizational operations to fit local conditions can lead to management crises. Fuyao maintained a strong hierarchical structure and operated a rigid reporting system, which prevented quick resolution of issues arising in the field. In contrast, Toyota provided sufficient authority to local management and adopted organizational operations that reflected local regulations and cultures. Thanks to this flexibility, Toyota was able to quickly respond to changing market conditions and maintain its competitiveness. As seen in the cases of these two corporations, ensuring continuous competitiveness in the global market requires localizing decision-making structures based on rapid information sharing between headquarters and local subsidiaries and operating internal collaboration and reporting systems flexibly.
Strategic implications for corporate survival in an era of protectionism
The Fuyao case featured in the documentary 'American Factory' illustrates that for companies to survive in the age of tariff wars and protectionism, operational strategies must be thoroughly innovated. First, when redesigning production strategies, corporations should not merely relocate production bases but rather build optimized production models tailored to local markets and labor environments. Second, they must innovate labor management methods and establish systems for cooperation with unions and workers. Third, technological innovation should be utilized not just as a means to reduce costs but as a core element of long-term management strategy. Finally, they must maintain a flexible organizational operation that allows for rapid response to changes in the local market.
The tariff war initiated by President Trump and the heightened protectionism presents both a crisis and an opportunity for South Korean corporations. Those considering entry into the U.S. market must learn from Fuyao's failures. Beyond mere relocation of production bases, they should thoroughly understand and respond flexibly to local labor practices and organizational operations. The path for corporations to survive in an era of protectionism is clear: localized production, cooperation with workers, sustainable technological innovation, and flexible organizational operations. Only corporations that implement these four principles can experience continuous growth in the global market. It is now time for South Korean corporations to respond proactively to the changing environment with bold operational strategy innovations.