Union strikes in South Korea cost Hyundai around $39 million in lost ouput

Article by Anita Panait, on August 22, 2013

Hyundai Motor Co.’s 45,000 union members staged Monday a four-hour walkout that led to lost production of 2,106 vehicles, costing the South Korean carmaker around KRW43.5 billion won ($39 million) in lost output.  The union said it will hold another partial strike on Tuesday before resuming discussions with the carmaker’s management on Aug. 22. 

Suspended wage discussions at Hyundai Motor in 2012 resulted to what is considered as the costliest walkout in its history, before the carmaker’s management agreed to cut working hours with two shorter day shifts.

Lee Sang Hyun, an analyst at NH Investment & Securities Co., told Bloomberg by phone that the walkout is bad news for Hyundai since “it marks the official start of yet another strike season.” He noted that the strikes are not expected to “last long nor incur more damage than” walkouts in 2012 did, thanks to the shorter working hours.

Hyundai and Kia’s labor unions are demanding for a pay increase of KRW130,498 ($116) a month and for 30 percent of the carmakers’ net income to be distributed to workers.  Wage talks with unions commenced May 28 for Hyundai and July 2 for Kia.

In 2012, Hyundai and the union agreed to end overnight shifts at its South Korean sites, cutting working hours from 20 hours a day to 17 hours each day. The strikes last year led to an output shortfall of 82,088 vehicles and around KRW1.7 trillion in lost sales.

On August 14, 2013, over 70 percent of Hyundai’s 45,000 union members voted yes to authorizing union leader Moon Yong Moon to call for a walkout. The strikes at Hyundai occur as the weakening yen provides Japanese carmakers an advantage in trimming prices or offering better incentives. [source: automotive news - sub. required]

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