One day after the union of Unitus, a lamp manufacturing subsidiary of Hyundai Mobis, called off a full strike, it launched another indefinite walkout. If the strike drags on, there are concerns it could disrupt production at Hyundai Motor and Kia and affect the sale of the lamp business.
According to the industry on May 12, the Kimcheon Hyundai Mobis branch of the Korean Metal Workers' Union, which represents Unitus workers, announced late the previous afternoon, "We will begin an indefinite full strike from the 12th until separate action guidelines are issued." The union had been on a full strike since on the 27th of last month but returned to work on May 11.
Unitus makes vehicle parts such as head and rear lamps, airbags, and brakes. Hyundai Mobis has decided to sell Unitus' Kimcheon plant, which produces lamps, and has selected French parts maker OP Mobility as the preferred bidder to negotiate detailed terms. The acquisition process is expected to be completed as early as the first half of this year.
Unitus' union launched another strike because it failed to find common ground with management over possible changes to working conditions ahead of the lamp business sale and a proposal to pay severance on a sliding scale by age. The previous day, Unitus management presented an "agreement for continued growth of the lamp business and job stability" and sat down with the union, but talks ultimately broke down.
Observers say the union pushed back because the phrase in the agreement that said "continue consultations with the acquirer" became an issue. Management said it would laterally transfer working conditions and the attendance system after the sale and make it a principle to succeed to the current collective agreement. But when the clause "continue consultations with the acquirer" was attached, the union reportedly concluded that maintaining the agreement after the sale could be difficult.
The size of the severance payment also became an issue. Management proposed to pay once more an amount equal to the aggregates of performance bonuses paid over five years and to add a "new start incentive" of 50 million won, but this incentive would be paid on a sliding scale, not in full, to employees aged 56 and older. Age 56 would receive 70%, 57 would receive 50%, 58 would receive 30%, and 59 would receive 10%. At age 60, it would not be paid at all.
If the Unitus union's strike is prolonged, Hyundai Motor and Kia will likely find it difficult to avoid production disruptions. Due to the strike that has continued since last month, lamp inventories are already gradually running low. In the first quarter of this year, Hyundai Motor's production was hit by a fire at engine valve manufacturer Anjeon Industry, and if lamp supplies also falter, its just-in-time production system will inevitably face an emergency.
Attention is also on whether the union's strike will affect the sale negotiations between Hyundai Mobis and OP Mobility. Because Unitus, as a subsidiary, is not a negotiating party, union consent is not strictly required for the sale talks. However, if the strike is prolonged, the negotiation schedule could lengthen, and there are projections that OP Mobility may raise union risk as an issue and demand a lower final acquisition price.