Hyundai Motor’s South Korean labour union staged its first full nationwide strike in 12 years on Monday (26 September) over stalled wage talks, putting the automaker’s earnings and sales targets at risk, media reports said.
According to Reuters, the full-day walkout came after a series of partial stoppages since July at the automaker’s factories across South Korea, its biggest manufacturing base which produced nearly 40% of its vehicles sold globally last year.
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The disruption, led by union boss Park You-ki, has led to lost production of 114,000 vehicles worth KRW2.5 trillion (US$2.26bn) as of Monday, the biggest strike-related output loss for the automaker in terms of vehicle value.
Union spokesman Jang Chang-yeal told the news agency said the union plans to stage a partial strike for the remainder of this week and stoppages could continue into next week depending on the company’s response.
“This year’s strike is lasting longer than expected. The third-quarter earnings should disappoint,” Samsung Securities auto analyst Eim Eun-young told Reuters, also citing weak domestic demand.
Hyundai said in a statement cited by Reuters it was “obviously disappointed” with any halt in production and was continuing to work with the union to resolve the dispute.
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By GlobalDataUnionised Hyundai workers in South Korea last month overwhelmingly voted down a tentative wage deal which was less generous than last year’s package.
Trade minister Joo Hyung-hwan urged Hyundai Motor’s union to resolve the dispute, saying the strike would “throw cold water on the exports recovery”.
According to Reuters, he said India [where Hyundai has a plant] overtook South Korea as the world’s fifth-biggest car producing country from January to July this year, adding that rigid industrial relations and higher wages would worsen the competitiveness of the domestic car industry.
Hyundai posted its 10th consecutive quarterly profit fall in the April-to-June period, hit by an emerging-market downturn and its failure to tap into strong global demand for sport utility vehicles.
Reuters said analysts expect Hyundai Motor to post weaker-than-expected profits for the third quarter, hit by the strike and slowing domestic demand after a cut in excise tax expired in June.
Hyundai and affiliate Kia Motors were expected to see global sales slip 0.6% to about 7.96m vehicles this year, below their targets of 8.13m, NH Investment & Securities analyst Cho Soo-hong told the news agency.
Hyundai Motor has been hit by strikes in all but four of the union’s 29-year history, the report noted.
