The Hyundai Motor union failed to narrow differences with management in this year's wage and collective bargaining talks, and ultimately launched a partial strike. Hyundai Motor, whose sales have recently fallen sharply in the domestic market, plans to roll out a series of new models in the second half to drive a rebound in results, but there are concerns that production could be disrupted if the union dispute drags on.
According to the auto industry on the 14th, the Hyundai Motor chapter of the Korean Metal Workers' Union began a partial strike on the 13th. Morning-shift production workers ended operations at 1:30 p.m., two hours earlier than usual. The evening shift also wrapped up work at 10:10 p.m., two hours early.
The Hyundai Motor union plans to carry out this format of a partial strike totaling four hours a day—two hours each by the morning and evening shifts—for three days through the 15th. In addition to production workers, sales and service union members and the Hyundai Mobis union are also said to be planning to set their own strike methods and take part.
Hyundai Motor labor and management have held 15 rounds of talks so far this year, but they have struggled to narrow differences over the size of the wage hike and the amount of performance bonuses.
In recent talks, management presented a third proposal that included raising the monthly base salary by 89,000 won, paying performance bonuses of 350% plus 10 million won, and granting 15 shares of company stock. Compared with the second proposal, the base salary was increased by 5,000 won, and 500,000 won in performance bonuses and three more shares were added.
The union is pushing back, demanding a 149,600 won increase in base pay excluding step raises, payment of 30% of the previous year's net profit as performance bonuses, and an 800% increase in bonuses. It is also demanding job security and retirement age extensions in connection with the introduction of artificial intelligence (AI) and robots, adoption of a 4.5-day workweek, and reinstatement of members dismissed for past illegal industrial action.
In the auto industry, there is an outlook that this year's Hyundai Motor wage talks could take a long time to conclude. With the semiconductor boom, Samsung Electronics and SK hynix decided to pay performance bonuses reaching hundreds of millions of won, raising members' expectations on wages and bonuses.
A Hyundai Motor official said, "Extending the retirement age or introducing a 4.5-day workweek requires legislation and is expected to entail massive additional labor cost expenditure, making these demands difficult to realize," adding, "The union will likely use this as a pretext to focus on maximizing this year's performance bonus payout."
Hyundai Motor has relatively smoothly concluded wage negotiations in recent years. Last year, although there was a one-time partial strike, talks were wrapped up in September, about three months after the initial meeting. But in 2017, after a prolonged impasse, an agreement was reached only in January 2018.
This year, with a high likelihood of deteriorating results due to factors such as high U.S. tariff rates, many expect negotiations to run in parallel for a considerable period as members call for larger increases in performance bonuses.
◇ Concerns over production disruptions for new models including Avante, Tucson, GV90 and even GV80 hybrid
The problem is that if negotiations drag on, there is a high chance that production of new models slated for consecutive launches in the second half will be disrupted. Struggling with U.S. tariffs and sluggish domestic sales, Hyundai Motor needs new cars to defend its second-half performance.
Hyundai Motor's total cumulative sales in the first half of this year were 1,966,267 units, down 4.9% from a year earlier. In the domestic market in particular, sales plunged 10.8% to 316,713 units. That's because key models have aged, turning off consumers.
Hyundai Motor plans to roll out a slate of new models in the second half to drive a rebound in results. In early next month, the eighth-generation full-change of the Avante, a core volume compact sedan model, will be released, followed by the fifth-generation new model of the Tucson, a compact sport-utility vehicle (SUV).
The premium brand Genesis will also unveil the GV90, a large flagship electric SUV, in the second half. The GV80, a core midsize SUV model, will add a hybrid variant and begin sales. In particular, the GV80 hybrid is cited as a "game changer" expected to lift Genesis' recently stagnant sales performance, but many worry that if wage talks drag on, the mass-production timeline slated for September could be delayed.
An auto industry official said, "The new Avante goes into mass production from next month, and the new Tucson, GV90 and GV80 hybrid were also scheduled to start mass production within the third quarter to be reflected in this year's results," adding, "If negotiations face prolonged difficulties and production and sales are disrupted, Hyundai Motor's results this year could fall short of expectations."