Hyundai and Kia officials now have two union guns pointed at them at a time when both are reeling from plunging sales.
Union members at both automakers have authorized strike action if necessary to achieve their wage and non-wage demands.
The Kia branch of the Korean Metal Workers Union held its strike approval vote July 18, with 72.1%, or 24,871 of the 28,240 unionists who cast ballots, approving strike action.
The KMWU’s Hyundai branch authorized strike action July 14 after a vote participated in by 50,274 members, or 89% of the workforce. About 66% of those who voted were in favor of strike authorization.
The Hyundai union members are receiving flak from the public and local officials in Ulsan, where most Hyundai plants are located, because a large contingent of the members have rented a golf course in Gyeongju and will golf rather than tend to union business during what is seen as a critical point in the labor talks.
Spokesmen for the 240 unionists who will play golf on the July 25 union foundation day note it’s a plant holiday so they don’t deserve the criticism. Critics cast union officials as wealthy capitalists than workers who claim to be in dire need of big raises.
The unions also are drawing some public criticism due to their rigid wage and non-wage demands at a time when both Hyundai and Kia are experiencing significant sales declines and profits are nosediving.
In the first six months of 2017 Hyundai’s global sales were off 8.2% year-over-year with 2.2 million units sold.
Kia’s sales for the first six months of 2017 were off 9.4%, with 1.3 million units sold.
In a recent investor-relations presentation, Hyundai told analysts its first-quarter 2017 operating income fell 6.9% to 1.25 billion won ($1.11 billion). Net income for the quarter was down a staggering 20.5% at 1.4 billion won ($1.25 billion).
Kia booked a 19% decline in first-quarter net profit, with earnings diving to 765.4 billion won ($681 million).
Analysts expect the second-quarter picture for Hyundai also will be bleak, and the company will book its 14th consecutive quarterly decline in profits.
Especially dragging down sales revenue for both companies is a current anti-Korea boycott in China, which has become their largest market by sales volume.
Both the Hyundai and Kia unions are demanding the same wage hike that is prescribed by the KMWU. They are asking for a 154,883 won ($138) average monthly wage hike and 30% of 2016 net income. The monthly wage hike represents a little more than a 7% increase over the current monthly wage.
Management at Hyundai declines to discuss the union’s demands for non-wage matters that include changing the current 8- and 9-hour 2-shift work schedule to two 8-hour shifts.
The union at Hyundai also is demanding the company guarantee production levels at all plants and convert the worker pay system to a monthly salaried basis, instead of an hourly basis. If the workers were on a fixed monthly salary they would be able to draw their full pay even during periods when plants were shut down.
The unions are hoping to reach agreements before the July 31 vacation period that’s less than two weeks away.
Talks also apparently are not going well at GM Korea, where union workers also have voted to authorize strike action. The union and management have passed the non-strike period imposed by the government and can strike at any time.
Unionists held a demonstration July 17 near the Cheong Wa Dae (Korea’s White House), demanding the government’s Korea Development Bank retain its 17% share in the company. They also are calling for the new government of pro-labor President Moon Jae-in to force GM Korea to develop a sustainability strategy that will guarantee their continued employment.
Union officials and rank and file have panicked since GM Korea CEO James Kim abruptly announced his resignation effective Aug. 31. They believe GM is getting ready to withdraw from South Korea.
A GM Korea spokesman says that’s not in the cards, telling WardsAuto, “Globally GM is now in the right markets to drive profitability, strengthen our business performance and capitalize on growth opportunities for the long term, and this includes Korea.”