Labor Strike Causes Production Stoppage for Hyundai-Kia, Concerns for GM, Renault

A labor strike has brought production to a halt for Kia Motor Company and its affiliate Hyundai Motor Company. On Sunday, the automakers announced that labor disputes at a supplier’s facilities had led to parts shortages for some SUV models.

In a statement, Huyndai announced that the production stoppage was caused by a May 18 labor strike at Yoosung Enterprise Company which makes engine components for the two South Korean automakers as well as Renault SA, Ssangyong Motor and General Motors Company.

Yoosung reportedly makes about 70 percent of the piston rings used by Hyundai-Kia in the Santa Fe and Sportage SUVs as well as the Sonata and K5 sedans.

Supply shortages have also affected production o f the Kia Carnival SUV at Kia’s Sohari plant and Hyundai’s Tucson ix and Veracruz SUVs at the Ulsan facilities since last Friday.

In a statement released today, Hyundai’s U.S. unit said the potential affect of the shutdown on the U.S. market is unknown. The statement said, “Hyundai Motor America is in close contact with Hyundai Motor Company concerning the supplier strike in Korea. At this time it is not clear what impact this may have on production of cars being built for the U.S. market in Korea. We will continue to closely monitor the situation.”

The statement also warned, “Our engine inventory will start to dry up on May 24, after which a production disruption will be inevitable for all of our passenger and commercial vehicles except for some small models.”

Spokesman Chris Hosford said he does not have specific information about which U.S.-exported models could be affected by the shortages.

Over the past year, about 77 percent of the Hyundai vehicles sold in the U.S. were built here. The popular Sonata mid-size sedan and Elantra compact sedan are both made at Hyundai’s Montgomery, Alabama plant.  The Hyundai Santa Fe and Kia Sorento crossovers are made at Kia’s West Point, Georgia plant.

General Motors’ and Renault’s Korean units have also warned that the labor strike could affect their output unless the situation is resolved in a timely manner.

A spokesperson for Renault Samsung Motors said, “Yoosung supplies all of the camshafts used in our SM5 2.0 models. We have an inventory of four days, but a prolonged strike could affect our production.”

A spokesperson for GM Korea said, “Yoosung’s piston rings account for around 50 percent of the parts used in our engines. There will be no major impact on production this week. But we are closely monitoring the situation.”

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