Hyundai Motor's Ulsan plant in Buk-gu, Ulsan, stands quiet after morning-shift workers left early Monday following a four-hour partial strike by the Hyundai Motor union, an affiliate of the Korean Metal Workers' Union, amid stalled wage negotiations. [Yonhap]
Hyundai Motor's Ulsan plant in Buk-gu, Ulsan, stands quiet after morning-shift workers left early Monday following a four-hour partial strike by the Hyundai Motor union, an affiliate of the Korean Metal Workers' Union, amid stalled wage negotiations. [Yonhap]

Hyundai Motor's efforts to recover lost production have hit a red light. The automaker must make up for output disrupted by a parts supplier fire in the first half of the year, but is now simultaneously contending with a strike, overtime refusals and scheduled line-conversion work.

According to industry sources Wednesday, Hyundai Motor will halt production at its Asan plant from Saturday through Aug. 12. The shutdown is primarily aimed at converting the line to accommodate 50,000 units of the Avante (Elantra) destined for North America — volume previously produced at Ulsan Plant 3.

The Asan plant is a key facility currently producing the Grandeur, Sonata and Ioniq 6. Adding Avante production means more models on the line, requiring equipment adjustments and line preparation work.

The production gap will widen further in early August. Hyundai Motor's domestic plants will observe their summer holiday from Aug. 3 through Aug. 7. Factoring in the surrounding weekends and the suspension of overtime work, the effective production blackout runs from Aug. 1 through Aug. 9.

Line-conversion work is also scheduled at other plants during the same period. Hyundai Motor is pursuing a sweeping reallocation of domestic production capacity in line with the reconstruction of Ulsan Plant 1 and Line 42, the transfer of North America-bound volume, new-model launches and the shift toward electrification.

Line-conversion work for Kona production is scheduled from July 1 through July 9 and again from Sept. 24 through Oct. 11. The work is intended to prepare for a full-model-change Kona expected toward year-end and to relocate existing Kona volume displaced by the Plant 1 reconstruction. Hyundai Motor plans to redistribute 240,000 units of Kona previously built at Plant 1, assigning 100,000 North America-bound units to Plant 2 and 140,000 units to Plant 3.

At the dedicated electric vehicle plant, construction work is also planned for early to mid-August to prepare for the introduction of the Genesis GV70 EREV (extended-range electric vehicle).

Workers from the Hyundai Motor union, an affiliate of the Korean Metal Workers' Union, leave early through the Myeongchon main gate of Hyundai Motor's Ulsan plant in Buk-gu, Ulsan, on Monday morning, as the union launched a three-day partial strike of four hours per shift. [Newsis]
Workers from the Hyundai Motor union, an affiliate of the Korean Metal Workers' Union, leave early through the Myeongchon main gate of Hyundai Motor's Ulsan plant in Buk-gu, Ulsan, on Monday morning, as the union launched a three-day partial strike of four hours per shift. [Newsis]

Follow-up construction work is also planned for next year. In February 2027, preparation work for North America-bound Kona production is set to begin at Ulsan Plant 2, while additional Kona-related work will proceed at Plant 3. The electric vehicle plant will also carry out follow-up work tied to the transfer of Ioniq 5 production. Full reconstruction of Ulsan Plant 1 and Line 42 is set to begin from September of that year.

The striking union, however, has issued a directive to "suspend all consultations and construction work except collective bargaining," throwing the construction schedule into immediate uncertainty.

Within the union, some voices are calling for an exception to allow essential construction work related to new models at plants such as Plant 2 and Plant 5. The dispute-response committee has agreed to discuss the matter, but concerns are growing that delays to construction needed for model changeovers and new volume assignments would inevitably disrupt the second-half production strategy.

Hyundai Motor had already been dealing with production disruptions since the first half of the year. A fire at parts supplier Anjeon Gongup in March caused component supply problems, leaving Ulsan Plants 2, 4 and 5 struggling to operate normally for roughly a month and a half in April and May.

If the strike drags on and pushes back the post-summer construction schedule, production losses will inevitably grow. Cumulative sales losses from the strike are estimated to have approached 700 billion won ($472 million) as of Wednesday.

Kia union members chant slogans at a rally declaring an all-out campaign for the 2026 wage and collective bargaining fight and job security at Kia's AutoLand in Gwangmyeong, Gyeonggi Province, on July 9. The union is demanding secured future production volume for the Gwangju-Hanam bus plant, expanded investment in domestic factories and new hiring, arguing that domestic production bases must remain competitive through the transition to future mobility. Gwangmyeong = Lim Se-jun
Kia union members chant slogans at a rally declaring an all-out campaign for the 2026 wage and collective bargaining fight and job security at Kia's AutoLand in Gwangmyeong, Gyeonggi Province, on July 9. The union is demanding secured future production volume for the Gwangju-Hanam bus plant, expanded investment in domestic factories and new hiring, arguing that domestic production bases must remain competitive through the transition to future mobility. Gwangmyeong = Lim Se-jun

Beyond Hyundai Motor, other Hyundai Motor Group affiliates are also embroiled in labor disputes. Kia's union is also escalating its campaign. The Kia branch of the Korean Metal Workers' Union is set to hold a strike authorization vote Thursday and plans to launch an actual strike, joining Hyundai Motor's union in piling pressure on management.

Hyundai Glovis workers are also set to stage an eight-hour full strike and plan to organize a rally in Yangjae-dong, Seoul, if wage negotiations fail to make progress by the 30th.

Kim Jin-seok, a researcher at Mirae Asset Securities, said wholesale sales were weak in the second quarter due to the Daejeon parts supplier fire and some component supply disruptions, but that domestic production disruptions appeared to have been resolved as of June. "However, with partial strikes continuing at a time when a July sales recovery is needed, the progress of negotiations could become a variable affecting the pace of second-half earnings recovery," Kim said.


kwater@heraldcorp.com