SOUTH KOREA [updated 15:50]: Usual strikes start over autoworkers' pay demands
Hyundai's annual round of wage negotiation-related strikes in Korea can cost it thousands of lost production units. Factories in China, the US, India and Turkey, where the new i20 pictured is made, help cushion the blow in export markets
It appears the annual round of strikes accompanying Korean autoworkers' wage demands is getting under way for 2014 as 47,000 unionised members of Hyundai Motor's 60,000-strong workforce downed tools today (23 September) for four hours, according to the Wall Street Journal.
Earlier, Bloomberg News reported shares in Hyundai Motor and affiliate Kia Motors fell 2-2.6% after the unions announced the partial strikes at both automakers' factories in South Korea.
Union spokesman Hwang Ki Tae said Hyundai staff would go on a partial strike from today until 27 September while wage talks with the company had been postponed indefinitely.
Kia’s union members were also downing tools on 24 and 26 September, the report added, citing the union's website.
"The unions' announcements triggered concerns that the strikes at Hyundai and Kia may take longer than expected," Kwon Soon Woo, an analyst at HI Investment & Securities, told Bloomberg.
"This will lead to an increase in lost production which may hurt the companies' third quarter earnings."
The news agency noted the strikes came after a group comprising Hyundai, Kia and affiliate parts maker Hyundai Mobis last week paid KRW10.6 trillion (US$10bn) for property in Seoul’s Gangnam district last week, triple the assessed value. Prior to the purchase, Hyundai union spokesman Hwang had said negotiations on wages would be concluded "soon".
The purchase is proof of "problems with chairman Chung Mong Koo’s imperial management", the Hyundai and Kia unions said in statements calling for the deal to be axed.
"The companies have proven that they have an abundance of cash through this deal" and the money should be spent on the workers, the unions said in the statements.
Hyundai reportedly plans to relocate the group’s headquarters to the property and plans to build a hotel and a car theme park.
Analyst Ko Tae-bong told the Financial Times: "The bid price is excessive, which is incomprehensible to investors. Investors had expected Hyundai to use most of its surplus cash for constructive things such as raising dividends or R&D spending. But they are angry to see the group burn cash like this to buy a single property."
Bonuses are a key point of this year’s annual wage negotiations after the country’s supreme court ruled last December periodic bonuses and other compensation must be included in workers' base pay. Both companies have been sued in court by their unions over the issue, with verdicts still pending, Bloomberg News said.