Workers on the morning shift leave the Hyundai Motor Ulsan factory's Myeongchon gate in Buk-gu, Ulsan, two hours early on Monday as the Korean Metal Workers' Union's Hyundai Motor chapter begins a three-day partial strike. [Yonhap]
Workers on the morning shift leave the Hyundai Motor Ulsan factory's Myeongchon gate in Buk-gu, Ulsan, two hours early on Monday as the Korean Metal Workers' Union's Hyundai Motor chapter begins a three-day partial strike. [Yonhap]

Hyundai Motor disclosed a production halt at all its plants, including the Ulsan factory, following a partial strike by its union. The sales figure for the affected production areas was listed at approximately 79 trillion won ($52.4 billion).

Hyundai Motor said Monday that production in its automobile manufacturing, maintenance and sales divisions would be suspended across all facilities, including the Ulsan factory. The company cited "a partial strike related to collective bargaining" as the reason and said the disruption would cause "partial production setbacks across all vehicle models."

Sales in the affected divisions totaled 78.77 trillion won based on last year's figures. Hyundai Motor's total consolidated sales last year came to 186.25 trillion won, meaning the affected divisions account for 42.3 percent of recent revenue.

The production halt is scheduled to run from Monday through Wednesday. During that period, the day shift and night shift will each stage a two-hour work stoppage, resulting in a maximum of four hours of lost production per day on the assembly line.

"The listed dates reflect only what is currently scheduled," Hyundai Motor said. "There is a possibility of additional strikes until a collective bargaining agreement is reached."

The union had already begun refusing overtime before the partial strike. Starting last Monday, workers halted weekday extended shifts and Saturday overtime — except for work required under essential agreements — to pressure management. Company-organized training, excluding job-related instruction, was also included in the refusal. Basic factory operations have continued, but additional output has declined. The weekend overtime shift scheduled for Saturday did not take place.

Labor and management resumed full negotiations on July 2, 20 days after the union declared a breakdown in talks on June 12. The two sides held intensive bargaining sessions at the 13th, 14th and 15th rounds of talks on Wednesday, Thursday and Friday of last week, respectively, but failed to reach an agreement.

At the 15th round, management put forward its third proposal: a base wage increase of 89,000 won, a performance bonus of 350 percent plus 10 million won, and 15 shares of company stock. The union rejected the offer as falling short of members' expectations and declared the talks over. It subsequently convened its second central strike committee meeting and voted to hold a three-day partial strike from Monday through Wednesday.

The union is demanding a base wage increase of 149,600 won this year, a performance bonus equivalent to 30 percent of last year's net profit, an 800 percent increase in bonuses and an extension of the retirement age. Management has said production disruptions must be kept to a minimum given the importance of new vehicle launches in the second half of the year and the need to restore earnings.

The scale of potential production losses adds to the pressure. When the union staged a 16-hour partial strike last year, the disruption was estimated at around 7,000 vehicles and sales losses in the 300 billion won range. This strike amounts to a total of 12 hours of lost line time. A simple proportional calculation suggests the disruption could reach around 5,000 vehicles and sales losses in the mid-200 billion won range.

The strike also coincides with a general strike planned by the Korean Confederation of Trade Unions and the Korean Metal Workers' Union. The KCTU has announced a general strike for Wednesday, demanding direct negotiations with prime contractors, industry-wide bargaining and guarantees of basic labor rights. With the Korean Metal Workers' Union also calling for strikes at its affiliated workplaces, observers say labor-management risks could grow across major Hyundai Motor Group affiliates.


kwater@heraldcorp.com