Parts makers ensnared in Hyundai strike woes

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Parts makers ensnared in Hyundai strike woes

The ongoing strike by Hyundai Motor’s militant labor union is now threatening to hurt suppliers of the group’s auto parts.

The nation’s No. 1 automaker said 11 recent incidents of industrial action by the union - two in July and nine in August - cost it 1.54 trillion won ($1.36 billion) in lost production, or 74,618 vehicles, as of Tuesday.

The union launched a four-hour walkout on Tuesday and downed its tools for another six hours yesterday, vowing to repeat the exercise today.

If production stalls for another six hours today as anticipated, Hyundai will record the worst union-inspired loss in its history, exceeding the 1.64 trillion won it forfeited in 2006, it said.

Meanwhile, Hyundai’s auto part suppliers are also shaping up as victims of the union’s industrial action.

According to the automaker, their estimated sales loss had already crept up to 1.32 trillion won as of Tuesday. About 330 companies are so-called tier-one suppliers, while another 5,000 small firms are listed as tier-two and tier-three.

The carmaker said that many were having to scale back production or even temporarily shut down their operations due to the series of walkouts.

“We have heard that some small companies could go bankrupt if the strikes continue,” an employee from Hyundai Motor said. “They are trying to keep their factories running, but I think their inventories are already overstocked.”

Civic groups in Ulsan, where Hyundai’s main plant is located, are also calling to end the protracted labor dispute to keep small suppliers in business.

The Citizen Council for Happy City Ulsan, an umbrella organization that represents 101 civic groups in the city, released a statement on Tuesday urging Hyundai’s management and union to reach an agreement as soon as possible.

Issues being fought over include wages, work-shift times and the status of irregular workers.

“Resorting to strikes is a self-destructive act that is hurting everyone involved,” the civic group said in a statement. “We hope Ulsan’s economy will become healthy again.”

The wage negotiations entered their 21st round yesterday, with both sides trying to narrow their differences.

By Joo Kyung-don [kjoo@joongang.co.kr]

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