Hyundai’s workers strike; first time in 12 years
Hyundai Motor Co. plants in South Korea were crippled by the first complete strike on Monday by unionized workers the first in more than a decade, threatening to worsen the auto maker’s profit slide.
Assembly lines at all of the company’s three domestic plants halted early in the day, crippling production of thousands of vehicles at the largest auto maker in South Korea. Production will remain suspended until after midnight, a union spokesman said.
The workers also plan partial strikes for six-hours from Tuesday through Friday, he said.
The local factories–which comprise Hyundai’s largest manufacturing base globally–accounted for nearly 40% of its global output last year.
“While we are obviously disappointed with any temporary stoppage in production, we still continue to work with our labor union to resolve this issue as quickly as possible,” the company said.
The action marks the first time that Hyundai’s unionized workers, currently totaling nearly 50,000, have staged a full work stoppage since 2004.
The general strike comes after union members, who account for more than 70% of Hyundai’s 67,000-strong domestic labor force, in August rejected a tentative wage deal agreed between their leaders and management, which had offered smaller increases in basic pay, bonuses and incentives than in the previous year’s package, citing worsening business conditions.
Workers at Kia Motors Corp., a Hyundai affiliate, also said they would stage partial strikes for three days this week to demand higher wages.
Hyundai, the world’s fifth-largest auto maker by output when combined with Kia Motors, has been hit by strikes in all but four years of the union’s nearly three-decade history, leading to lost production. Any significant work stoppage this year could prove more damaging because Hyundai is already grappling with flagging sales in its major markets.
Hyundai posted its 10th consecutive decline in quarterly profit in the second quarter, and warned of a tough second half, dimming the outlook for achieving its full-year sales target. Analysts expect earnings to continue to slide.
“This year’s strikes at Hyundai plants are longer than expected. Its third-quarter earnings should disappoint,” said NH Investment & Securities analyst Cho Soo-hong. Mr. Cho expects the combined auto sales of Hyundai and Kia to decline 0.6% to about 7.96 million vehicles this year, below the duo’s target of 8.13 million vehicles.
This summer, a series of partial strikes at Hyundai since July have led to lost production of more than 100,000 cars valued at two trillion won ($1.8 billion), according to the company.
But much of lost production is usually recovered through extra work once the strikes end.
Source: MarketWatch
