Skip navigation
Launch of new Kona CUV triggered 2day strike by Korean Hyundai workers
<p><strong>Launch of new Kona CUV triggered 2-day strike by Korean Hyundai workers.</strong></p>

Korean Automakers Endure Stormy Labor Relations

If the union wins the same wage increase from GM Korea as it seeks from Hyundai and Kia, analysts believe, it will push GM&rsquo;s strategic planners to look for ways to cut the money-losing, strike-prone subsidiary loose from the parent company&rsquo;s portfolio.

The Korean Metal Workers Union, which represents all hourly workers at Hyundai, Kia and GM Korea, is making financial demands on Korea’s remarkably successful automotive industry that may see one of them struggling to survive.

This is certainly the case at GM Korea, where unionists have returned to the bargaining table after a 7-week pause in negotiations that followed three weeks of partial strikes.

The union at this embattled company, whose sales totals already are being crushed by Hyundai and Kia, is asking for the same wage increase the KMWU hopes to exact from Hyundai and Kia. If successful, analysts believe, it will push GM’s strategic planners to look for ways to cut the money-losing, strike-prone subsidiary loose from the parent company’s portfolio.

The standard monthly wage increase being sought for workers at GM Korea, Hyundai and Kia is 154,883 won ($142). The average wage for workers at GM Korea, based on 2016 financial statements, is 87 million won ($79,700) per year. By comparison, Hyundai workers’ average annual wages are 94 million won ($86,100). Kia workers’ wages are comparable.

At Hyundai and Kia the union also seeks bonuses based on 30% of each company’s 2016 net income. At GM Korea the union seeks a flat five months’ pay as a bonus.

Wage negotiations began May 23 at GM Korea, and the 20th round of negotiations was held Dec. 6, the same day the new round of partial strikes began.

The company’s new CEO, Kaher Kazem, a native Australian who presided over GM’s pullout from the India domestic market, attended the session. Kazem assumed his position Sept. 1 and the union went on strike within days.

Despite its travails, a GM Korea spokesman tells WardsAuto, “The company will continue making an effort to peacefully complete the current negotiations and build amicable labor relations.”

In a separate statement, the company says: “We do not publicly disclose detail numbers for the wage increase (sought by the KMWU), but we can say that labor costs increased more than 50% from 2012 to 2015, and it is known that additional labor costs have been very significant to (the financial condition of) GM Korea.”

The Hyundai Branch of the KMWU is even more volatile. It is currently holding partial strikes of three to four hours per shift at all seven of the automaker’s domestic plants. It is the second consecutive week in an ongoing series of partial strikes. The strikes began Dec. 5, the same day the two sides held their 36th round of negotiations.

A union spokesman says Hyundai management is arrogant and insincere and the union sees no hope in resolving wage negotiation differences by year-end, thus was forced to take strike action.

Analysts estimate the value of lost production as of Dec. 8 for all 13 days of partial strikes held this year totals more than 1 trillion won ($919 million).

New Kona CUV Driven Into Fight

The early-December strike action over wages followed a two-day walkout held in November protesting the company’s launch of a new production line in Ulsan for producing the Kona compact CUV. The new model is seen as vital to perking up Hyundai’s dismal global sales and helping the company come close to its 2017 sales goals – but which it already has missed.

The company lost 1,230 units of Kona production in that two-day strike, valued at some 17.4 billion won ($16 million).

In November Kona domestic sales tallied just 4,324 units, below analysts’ expectations and reflecting the strike. Year-to-date domestic deliveries total 20,904 units since the CUV’s full-fledged sales launch in September.

Ha Boo-young, the new president of the Hyundai union, says the automaker was arrogant in adding production capacity for the Kona without union approval, and argues the new model’s design enables it to be produced with less manpower than most other vehicles.

Hyundai President Yoon Hap-han, responsible for all of the automaker’s domestic production operations and labor relations, calls the strike regrettable, interrupting production of a high-demand vehicle when most plants are suffering from one of the company’s worst-ever sales declines.

The company reportedly will file both civil and criminal charges against the union, seeking compensation for the damage caused by the two-day Kona strike. Hyundai contends the strike was not connected in any way with wage negotiations and was illegal.

Korean labor law permits strike action only when the bargaining process fails, and even then the union has to apply first for arbitration.

The U.S. version of the Kona debuted Nov. 29 at the Los Angeles auto show, but unionists say the company’s plan for an early 2018 U.S. sales launch is overly optimistic and will not be met.

Hyundai officials respond that the U.S. 2018 sales plan for Kona will be fully implemented and is not going to suffer because of the union’s strike action or ongoing partial strikes. Indeed, it was a starring attraction when unveiled at the L.A. show, the automaker says.

In its latest sales report Hyundai’s domestic sales in November were up 12.8% at 63,895 units, and up 8.4% year-on-year at 635,578 – good performance in a market that is down nearly 10%.

However, November overseas sales tallied 359,045 units, a decline of 13.6% and for the 11-month period fell 8.4% to 3.46 million vehicles.

Globally the company sold 422,940 vehicles in November, a drop of 10.4% from like-2016, and for the 11 months, Hyundai’s sales declined 6.1%, with 4 million vehicles sold.

Although the recent political storm between China and South Korea over Korea’s deployment of a U.S. anti-missile system shows signs of abating, it does not show in the sales numbers.

Hyundai sold just 95,012 vehicles in China in November, a drop of 25.2% compared with the prior year, and sales for the 11-month period were down 33.3%, with 664,368 vehicles sold.

The U.S. also is a problem child for Hyundai at this time. November deliveries of Hyundai’s U.S.-built vehicles were down 33.3% with 20,200 vehicles sold. For the 11 months, sales were down 14.2% with 311,699 U.S.-made vehicles sold, according to Hyundai’s own sales report.

Hyundai’s corporate sister Kia is not unscathed by the KMWU. The union and management also are deadlocked in wage talks, although Kia by policy will not comment on bargaining.

The union last month filed a new lawsuit against Kia for back wages for the 2014-2017 period. The action follows two lawsuits in which Kia was ordered to pay workers some 420 billion won ($387 million) in back wages for the 2008-2011 and 2011-2014 periods.

The earlier rulings held that Kia was required to include bonus payments, lunch payments and other compensation in calculating regular wages. Restating the regular wage that way exposed the company to a substantial shortfall in overtime, severance and other payments.

Kia immediately set up a third-quarter liability contingency for its exposure through 2017 and took a hit of 1 trillion won that erased third-quarter profit.

Korea’s other domestic automakers, Renault Samsung and Ssangyong, signed new wage agreements months ago without strike action. Workers at the two companies are not represented by the KMWU.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish