Hyundai union rank and file approve pactHyundai Motor said yesterday its labor union’s members have endorsed a contract reached last week, ending wage negotiations marred with strikes.
The company said the agreement was approved by 55.1 percent of the 42,300 union members who cast votes on Monday. About 4,000 other union members did not vote.
The company said the official signing of the agreement is scheduled for tomorrow.
The agreement ends a strike that Hyundai estimates cost the company more than 1 trillion won ($921 million) in lost production.
Korea’s largest automaker, which reported a drop in profits for the third straight quarter, is grappling with increased competition as a weaker yen gives Japanese carmakers an edge in the lucrative U.S. market.
“The relatively early end of strikes will help the company post profits that are better than last year’s and enable the company to meet its target production,” said Kwon Soon-woo, an analyst at HI Investment and Securities, before the results of the vote were announced. “The strikes were definitely a risk factor to investors, so with that out of the way shares will now look more appealing.”
The wage agreement includes a 97,000-won increase in monthly base salaries and bonuses equal to three-and-a-half months’ wages plus 5 million won, according to a Sept. 6 statement on the union’s Web site. That is equivalent to an average of 28.8 million won per employee, according to the statement.
Hyundai workers began partial strikes on Aug. 20, resulting in an estimated 50,191 vehicles that were not produced as scheduled.
Together with the union’s boycott of extra weekend shifts earlier this year, the company puts the cost of this year’s labor strife at more than 2.7 trillion won.
The union refused extra work for 13 weekends beginning March 9, demanding higher compensation on those shifts. The stoppage, although not a legally sanctioned strike, cost Hyundai 1.7 trillion won in lost production, according to the company’s estimates.
Hyundai estimates that labor disputes prior to this year caused missed production totaling more than 1.2 million vehicles, with lost sales worth 13.3 trillion won. Workers have gone on strike 23 of 27 years since the union’s 1987 formation.
The automaker has sought to reduce the effect of strikes in Korea by expanding production in the United States, China, India and Turkey during the past decade.
Worldwide, Hyundai sold 3.1 million vehicles in the first eight months of this year, a 12 percent increase from a year earlier, according to the company’s regulatory filing Sept. 2. The automaker will probably report a third-quarter profit of 2.1 trillion won, according to the average of 21 analyst estimates compiled by Bloomberg.
Kia Motors, an affiliate of Hyundai, is still negotiating a wage pact with its union.
The nation’s second-largest automaker has lost 352 billion won, or 19,822 units in production, as of Sept. 8 from strikes that began on Aug. 21, Kia said in an e-mailed statement on Monday.
BY JOO KYUNG-DON, BLOOMBERG [firstname.lastname@example.org]