Hyundai’s workers give leaders strike authorizationHyundai Motor workers endorsed a possible strike over wage demands for a third straight year, threatening output at Korea’s largest automaker.
Almost 70 percent of Hyundai’s 47,000 labor-guild members voted in favor of authorizing union leader Lee Kyung-hoon to call a walkout, said Hwang Ki-tae, a union spokesman, in a text message yesterday. The strike could begin as soon as Monday, Lee said at a press conference on July 30.
While Hyundai is used to stoppages - workers have struck in 22 of the past 26 years - the next walkout looms as the strong won erodes the value of Korean exporters’ profits from overseas. It will also represent a changed tactic by union boss Lee, whose previous term from 2009 to 2011 was also the company’s longest stretch of uninterrupted production.
“This would be a blow to Hyundai, which has already been hit hard by the unfavorable exchange rate,” said Lee Sang-hyun, an analyst at NH Investment & Securities. If the union strikes, “it’s likely that the company’s third-quarter profits will hit a low point.”
Hyundai shares fell 1.5 percent to close at 230,000 won ($225) in Seoul trading Thursday. Affiliate Kia Motors fell 1.6 percent. The benchmark Kospi index was little changed at 2,063.22.
Seoul-based Hyundai has lost production of more than 1.3 million vehicles valued at 16 trillion won due to strikes since the union was established in 1987, according to company estimates.
Workers at Korea’s largest automaker and affiliated companies, including Kia and Hyundai Mobis, said on July 30 they would put down their tools starting Monday if management refuses to count bonuses as base wages.
The inclusion of bonuses has been the main issue at this year’s annual wage talks with manufacturers after the country’s Supreme Court in December sided with auto-parts maker KB AutoTech’s employees, who sued their Asan, South Korea-based employer in July 2010 to count the bonuses they receive every other month as part of their wages.
The court left it up to companies and their unions to carry out the specifics of the ruling. The court rejected workers’ claims that seasonal allowances and welfare benefits should also be included in base salaries.
An increase in labor costs would add pressure on Hyundai and Kia because a higher base salary magnifies total wage costs as it’s used to calculate overtime and annual raises. The court decision will translate into at least 13.8 trillion won in added annual labor costs for companies, according to estimates by the Korea Employers Federation at the time.
The won has appreciated against most major currencies in the past 12 months, gaining 10.6 percent against the dollar and hampering the ability of the country’s exporters to compete in global markets. The yen weakened 4.6 percent against the dollar in the period.
Hyundai forecast in July that the won will average 1,020 against the dollar in the second half of the year, as the yen will be at about 100 against the dollar, helping Japanese automakers “aggressively market” their vehicles. Bloomberg