Hyundai Motor Discusses Palisade↔Staria Production Swap at Employment Stability Committee

US Subsidiary Requests Local Production Increase Amid Palisade Popularity... Union Opposes Overseas Manufacturing
Company Proposes Transferring Staria from Ulsan Plant 4 to Jeonju Plant and Additional Domestic Palisade Production

[Asia Economy Reporter Kim Hyewon] Hyundai Motor Company has encountered difficulties in allocating the popular Palisade model produced at its Ulsan plant. The U.S. subsidiary expressed its intention to produce locally due to supply shortages, raising concerns at headquarters. However, the labor union strongly opposes overseas production, putting the company in a position where it must decide whether to increase export volumes from domestic plants. The management proposes transferring the Staria line from Ulsan Plant 4 to the Jeonju plant and increasing Palisade production by the corresponding amount.

According to industry sources on the 8th, Hyundai held the second Employment Stability Committee plenary meeting the day before to discuss this matter. After the management presented the original plan at the first meeting on the 26th of last month, opinions were exchanged over a revised proposal reflecting the union’s demands through practical consultations. The management side included 32 attendees such as Hyundai Motor President Ha Eonta, while the union side had 27 participants including Lee Sangsoo, Chairman of the Hyundai Motor Labor Union (Head of the National Metal Workers' Union Hyundai Motor Branch).

The Employment Stability Committee, jointly participated by Hyundai Motor’s labor and management, is reviewing three main issues. First is the volume strategy for the Jeonju plant, which has faced difficulties for several years. The plan is to transfer the Staria production volume currently at Ulsan Plant 4 Line 1 to the Jeonju plant to overcome the crisis. This was also a campaign pledge of Chairman Lee during his election. A representative of the Ulsan Plant 4 union members attending the committee expressed opposition to the unilateral transfer of Staria production, but the Jeonju committee chair has requested volume sharing to ensure the survival of Jeonju union members.

The second issue is the solution to supply shortages at Ulsan Plants 2 and 4. If labor and management agree to transfer Staria production to Jeonju, the Ulsan plants plan to increase Palisade production, which is currently suffering from supply shortages. The union opposes this, fearing that only Staria volumes will be taken away without additional Palisade production. However, Hyundai is persuading that the shortage is only for the U.S. supply and that there will be no change in Ulsan Plant 4’s volume. Furthermore, if the revised proposal is accepted, Hyundai plans to invest in equipment in the body, painting, and assembly departments to expand supply capacity. President Ha stated, “We have solved volume issues for 20 to 30 years, and production flexibility is very important. The Palisade selling 30 to 40% more than expected is not the responsibility of the production plant or sales, and there will be no impact on employment at Ulsan Plant 4.”

Currently, Palisade exports 6,000 to 7,000 units monthly to the U.S., but sales reach 8,000 to 9,000 units, causing sales to outpace production and inventory to be only about one month’s worth. The Kia Telluride is also so popular that supply struggles despite a recent increase of 20,000 units. The U.S. subsidiary demands an additional supply of 20,000 to 30,000 Palisades, and if this is impossible due to union opposition, they plan to produce locally in the U.S. directly.

Hyundai’s labor and management also discussed responses to the U.S. government’s electric vehicle subsidy policy. Considering the volume conditions of domestic plants, Hyundai plans to gradually promote local production in the U.S. of one model among the Ioniq 5, GV70, or Kona electric vehicles. The management’s position is that local production in the U.S. is an unavoidable choice for price competitiveness under the Biden administration’s policy. However, the union opposes this, arguing that as domestic volumes move overseas, equivalent volumes must be exchanged domestically. In particular, the union forbade local production of the Ioniq 5 in the U.S.

This content was produced with the assistance of AI translation services.