Hyundai Motor to build its first domestic car factory in 29 years

Hyundai Motor management and labor sit down to negotiate this year's wage at the carmaker's plant in Ulsan on May 10. [HYUNDAI MOTOR]

Hyundai Motor is building its first domestic automotive manufacturing plant in 29 years.

The last time it built one in Korea was in 1996.

Groundbreaking is scheduled for next year, and the plant will produce only electric vehicles (EV). This is the first full-fledged EV production plant in Korea for Hyundai Motor.

Existing production lines will be upgraded as the new factory is constructed. EVs made in Korea are assembled on production lines within factories that manufacture internal combustion engines.

The company has not yet decided on the size of the plant or where the new factory will be built.

The EV-exclusive production plant decision came a day after Korea's largest automaker negotiated with its labor union at the company's plant in Ulsan.

Management and labor have been negotiating on wages and on lifting the peak wage system since May.

One of the key agreements reached includes Hyundai Motor hiring new factory workers in the first half of next year. If so, this would be the first time production positions are opening up in 10 years.

While the company has been hiring for other positions, including marketing, accounting, research and development and design, it has not been hiring new recruits for production. It has been filling the positions with subcontracted.

In May, the Korean automaker announced that it will be investing 63 trillion won ($48 billion) by 2025 in the Korean market jointly with Kia and Hyundai Mobis.

The investment will be used in developing eco-friendly vehicles, including EVs, and in new mobility technologies and internal combustion engine vehicles.

The investment promised by Hyundai Motor followed a promise made by Hyundai Motor Group Chairman Euisun Chung to invest $10.5 billion in the United States to build an EV-dedicated factory in Georgia and to develop future mobility technologies.

Since the announcement was made, the union has demanded that Hyundai Motor come up with specific plans for constructing a new EV production plant in Korea as well.

"We have made a decision based on a sustainable future for both management and labor at a time where the market changes toward future businesses and the global market suffers blows from all over," Hyundai Motor said.

"We will be working together so that our domestic plants become a global hub of future mobility."

Despite the promise of EV plants and new hiring, there is still a possibility of a walkout as the two sides have yet to narrow their differences on wages.

In addition to raises and bonuses, the union is demanding that the company stretch the retirement age and abolish the peak wage system, which puts a ceiling on wages after a certain age.

The company is offering a smaller base paycheck increase and increasing welfare programs in exchange for incentives.

Of the unionized workers, 71.8 percent voted to walk out if their demands are not met in a vote earlier this month.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]