Hyundai Motor workers strike at all three domestic plants in South Korea

Thursday, Sep 24, 2015

More than three-quarters of the workforce of Hyundai Motor Co. walked off the job on Wednesday, disrupting output at South Korea’s largest auto maker for a fourth straight year.

Workers at all of the auto maker’s three domestic plants began an eight-hour strike early Wednesday morning after weeks of talks with management on wages and benefits broke down, and planned further strikes on Thursday and Friday.

“We won’t return to the negotiation table unless the company comes up with a better proposal,” union spokesman Hwang Ki-tae said.

The 48,000 union members of Hyundai’s 62,000-strong labor force overwhelmingly voted for strike plans earlier this month, adding to woes for the car maker already struggling with profit and sales declines.

Hyundai, the world’s fifth-biggest auto maker along with its affiliate Kia Motors Corp., has been hit by strikes in all but four years of the union’s nearly three-decade history, although they usually make up losses with extra work later that year.

Any significant work stoppage this year, however, could prove more damaging to Hyundai because it is pinning its hopes on recently-launched new models to reverse flagging sales in China—its biggest market—and in Korea.

During summer strikes last year, Hyundai suffered a production loss of about 42,000 vehicles worth 910 billion won ($772 million).

Hyundai has said the workers’ demands, which include a 7.8% increase in monthly wages and a 2015 bonus equal to 30% of the previous year’s earnings, are excessive and cannot be met without seriously crippling the company.

The workers are also demanding a guarantee of job security and extension of retirement age to 65 from 60 now.

“There is nothing to be gained from a strike that ignores reality,” said Hyundai Chief Executive Yoon Gap-han at a meeting with union leaders earlier this week.

Hyundai posted six consecutive declines in quarterly profit through June this year as its sales slumped in China and the U.S. due to its lack of new models.

The company’s total auto sales dropped 2.8% this year through August, and executives have signaled that the car maker might miss its full-year sales target.

Analysts said recurring labor disputes, low productivity and high wages at home are expected to put further pressure on the auto maker to accelerate overseas production. Hyundai currently makes about 60% of its cars overseas.

“Hyundai workers know external business conditions aren’t favorable for them to prolong their work stoppage. The strike this year won’t likely become protracted,” Shinyoung Securities analyst Lee Jae-il said.

Last week, Kia Motors workers also voted for a possible strike action, giving union leaders the authority to call for a strike any time.

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