Seoul, Aug. 19: Hyundai Motor is expected to suffer cumulative production losses of more than 62,000 vehicles as its labour union intensifies strike action amid a prolonged deadlock over wage negotiations, according to industry sources.
The latest round of industrial action is set to include partial strikes on Wednesday and Thursday, followed by an eight-hour full-scale strike on Friday, the company’s first full-scale walkout in a decade.
The union has also announced further four-hour partial strikes next Monday and Tuesday, extending the latest round of industrial action to five days.
According to industry sources familiar with the matter, the cumulative production losses from last month through August 25 are expected to reach around 62,000 vehicles. The resulting lost sales have been estimated at approximately 2.6 trillion won, or around US$1.85 billion.
The strike action follows the failure of Hyundai Motor’s management and labour union to reach an agreement on wages and other demands. The two sides held their 16th round of negotiations on Wednesday but were unable to narrow their differences.
The 40,000-member labour union has sought an increase of 149,600 won in monthly base pay and a performance-based bonus equivalent to 30 per cent of the company’s net profit for the previous year.
Hyundai Motor, however, has offered an 80,000-won increase in monthly base pay, along with a performance bonus equivalent to 350 per cent of monthly salary plus 10 million won and 15 shares of company stock.
With the two sides yet to reach an agreement, the union has moved ahead with an extended strike schedule, adding further pressure on the South Korean automaker.
The labour dispute comes at a time when Hyundai Motor is already facing weakening global sales.
The company reported earlier this month that its global vehicle sales had declined year-on-year in July, citing production disruptions caused by partial strikes as well as weaker demand.
Hyundai Motor sold 318,454 vehicles worldwide in July, representing a 5.1 per cent decline compared with the same month a year earlier.
Its overseas sales declined 3.2 per cent year-on-year to 270,341 units, while domestic sales fell 14.4 per cent to 48,113 vehicles.
The July decline marked Hyundai Motor’s 10th consecutive month of falling global sales, adding to concerns over the impact of the continuing labour dispute on the company’s production and business performance.
According to Hyundai Motor, the weaker sales performance was partly linked to production disruptions caused by the partial labour strike in July. The company also attributed the decline to customers postponing purchases ahead of the launch of new models.
The latest industrial action is therefore expected to compound the pressure on the automaker, with the estimated production losses continuing to rise as the strike extends through the coming week.
The planned eight-hour strike on Friday is particularly significant, as it will be the first full-scale walkout by Hyundai Motor’s union in 10 years.
The dispute remains centred on differences between the wage and performance-related demands put forward by the union and the compensation package offered by the company’s management.
As the five-day strike action continues, industry sources expect the cumulative impact on production from the labour unrest that began last month to reach approximately 62,000 vehicles by August 25.
The outcome of further negotiations between Hyundai Motor and its 40,000-member union will determine whether the two sides can reach an agreement and prevent further disruptions to production.
