Largest automaker blames union for March production decline

Vehicles manufactured at Hyundai Motor plants in Korea and shipped abroad fell 28 percent in March from a year earlier to 86,633 units. The situation was the same at affiliate Kia Motors, which saw a 12.7 percent year-on-year drop to 94,790 units.

It was the steepest decline since a 31 percent drop in August due to a labor strike.

The March numbers are considered unusual for a strike-free month with no major national holidays.

The top two leading automakers in Korea said the production cutbacks were mainly because labor unions refused to work on weekends for three straight weeks.

The companies said decreased production here was covered by increased production from overseas plants.

Hyundai Motor in March raised the production of foreign plants by 17.8 percent from a year earlier to 245,580 units.

Kia Motors raised the production of its overseas plants 13.3 percent from a year earlier to 101,791 units.

Hyundai Motor said as a result it was increase the number of vehicles for sale overseas by 1 percent. However, combined vehicle sales of both companies were down 0.9 percent year-on-year.

The situation was no better in the domestic market. Kia Motors’ sales tumbled 6.1 percent in March, while Hyundai Motor was flat, up just 0.1 percent.

“Sales of the Santa Fe went up because of the new model,” said a Hyundai Motor official. “If not for the new SUV, overall sales might have fallen.”

The automakers said lack of cooperation from the labor union was a major factor.

Hyundai Motor and Kia Motors last month started implementing a new work schedule.

That eliminated the overnight shift for the first time in the automaker’s history.

Production lines are shut between 1:30 a.m. and 8 a.m.

In order to make up for lower weekday production, the companies turned to weekend work.

Hyundai Motor estimated the new work schedule resulted in 20,000 less vehicles produced.

Hyundai Motor’s truck manufacturing plant in Jeonju, North Jeolla, has a 10-month backlog of orders, according to the company, but the union has insisted on maintaining the current 8 a.m. to 6 p.m. with no added shifts.

“I’m concerned that automakers, whose main headquarters are located overseas, might reduce productions at plants here after watching the rigid local union,” said an industry insider.

By Park Jin-seok [ojlee82@joongang.co.kr]