Hyundai Motor Company Reaches Tentative Agreement with Striking Workers in Korea

Hyundai Motor Company announced yesterday that it has reached a tentative agreement with laborers. Labor strikes at its plants in South Korea may keep Hyundai Motor Company from making its September sales targets.

According to one Hyundai executive, laborers in the company’s native market participated in partial strikes and refused to work overtime on five days in July and 21 days this month. Hyundai has not been hit by strikes in four years.

The executive, who spoke to Reuters on the condition that his identity not be divulged, said the strikes will affect sales in Hyundai’s home market which accounts for about 15 percent of the company’s total sales.  He said the company remains optimistic that it, along with Kia Motors affiliate, will meet their annual sales target. “The strike will lead to temporary drops in sales in August and September, although on an annual basis, the sales are expected to be fine,” he said. He did not offer specifics about how deep the “temporary drops in sales” might be. Hyundai does not issue domestic or global sales goals on a monthly basis.

As of last Tuesday, the labor strikes at its Korean plants had already resulted in lost production of 74,618 automobiles valued at $1.36 billion, making it the second-costliest strike in the company’s 45-year history. In 2006, strikes cost the company about $1.4 billion in lost production and revenue.

Under the new agreement, wages will rise by 5.4 percent and each workers will receive bonuses of 9.6 million Korean won; the equivalent of about $8,500. Hyundai agreed to do away with the overnight shift at its Korean facilities beginning in March 2013. Workers will vote to either accept or reject Hyundai’s offer on Monday.

Hyundai’s U.S. exports declined by about 25 percent between June and July. Hyundai and its affiliate, Kia Motor Company, expect to see combined global sales of seven million units this year. Last year, the two companies reported world-wide sales of 6.6 million vehicles.

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