Labor strike at one a supplier led Hyundai, Kia to a parts shortage

Article by Christian Andrei, on May 22, 2011

A labor strike at one of the suppliers of Hyundai Motor and its affiliate Kia Motors led to a parts shortage and resulted to a disruption in the production of several SUV models.

Hyundai said that this situation could have a significant impact as its rivals in Japan are preparing to resume normal production after they struggled to recover after the March 11 earthquake.

Starting May 18, parts supplier Yoosung Enterprise Co. halted production as labor members opposed the new wage and shift systems and moved to occupy production lines.

Yoosung supplies key engine components to Kia, Hyundai, as well as the Korean units of Renault SA, General Motors, and Ssangyong Motor. Yoosung supplies about 70% of the piston rings fitted in topselling models like the Santa Fe SUV, Sonata sedan, the K5 sedan and Sportage R SUVs.

This halt in supply affected the Ulsan plant’s production of Hyundai's SUVs like the Tucson ix, Santa Fe and Veracruz. Meanwhile, production of Carnival SUV at Kia’s Sohari plant was also crippled. In a statement, Hyundai said that its engine inventory will begin to dwindle on May 24.

After this, they won’t be able to avoid a production disruption for its passenger and commercial vehicles with the exception of a few small models. On the other hand, the Korean units of GM and Renault claim that there would be no immediate effect on its production if this sit-in strike remains unresolved.

Topics: hyundai, kia, strike

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