[Electric Vehicle Idling in Korea] Global Stakes at Risk... Stalled Due to Union Obstacles

Hyundai Motor and Kia at Standstill Amid Labor Union Conflict Over Production Base Relocation

In November last year, U.S. President Joe Biden (second from left) visited General Motors (GM) electric vehicle assembly plant Factory Zero.

[Asia Economy Reporter Choi Dae-yeol] #Hyundai Motor Company began production of the Ioniq 5 at its Indonesian plant in mid-month. This vehicle is the first model to apply the E-GMP, an electric vehicle dedicated platform developed by Hyundai Motor Group, and it is the first time that Hyundai Motor and Kia have produced a vehicle at an overseas complete vehicle plant. This marks a shift from the previous strategy of producing all units at the domestic Ulsan plant to relocating the production base overseas.

As global automakers are rushing to accelerate the establishment of electric vehicle ecosystems, concerns are rising that South Korea’s production infrastructure is significantly lagging behind, making policy supplementation urgent. There are worries that the competitiveness of the Korean automotive industry could greatly decline due to resistance from labor unions and policies that run counter to global trends regarding the introduction of new electric vehicles into existing plants.

According to the complete vehicle industry on the 29th, Kia decided in November last year to convert the Gwangmyeong plant into an electric vehicle production base, but progress has stalled for five months. This is due to the inability to reach an agreement with the labor union, which fears workforce reductions. In early 2020, Kia announced ‘Plan S,’ signaling a transition to future mobility companies such as electric vehicles, designating the Gwangmyeong plant as the third electric vehicle production plant after the Gwangju and Hwaseong plants, but progress has been sluggish.

The labor union stated in mid-month, when the management explained the annual business plan, that "when deploying electric vehicles, the union members prioritize job security," and "the union has no intention of cooperating with management if the employment of union members is not guaranteed." Hyundai Motor also allocated the sedan-type electric vehicle Ioniq 6 to the Asan plant, but the specific mass production schedule is undecided. To start mass production of the new model, the company and the labor union must agree on the ‘man-hours’?the number of workers assigned to the production line?but there is a significant gap between labor and management. In fact, Hyundai Motor and Kia, which account for most domestic electric vehicle production, are finding it difficult to respond aggressively to the related market due to being hampered by the labor union.

President Joko Widodo of Indonesia is signing the Ioniq 5 electric vehicle, which Hyundai recently began producing in Indonesia.

In reality, demands for new electric vehicle allocations are strong among labor unions at major complete vehicle plants, but there is a large difference in perspectives regarding the workforce to be deployed on site. Electric vehicle assembly lines require about one-third fewer workers compared to conventional internal combustion engines. Since the number of workers per model is a matter for labor-management agreement and the unions are sensitive to reductions in union members, they do not easily approve.

As the domestic situation becomes unfavorable, automakers facing urgent timelines are turning their strategies overseas. In the case of Hyundai Motor, which decided to produce the Ioniq 5 at the Indonesian plant, it is also reported that the final adjustments are underway for plans to produce electric vehicles in the United States.

Last year, Hyundai Motor announced plans to invest $7.4 billion in the United States by 2025 for electric vehicle plants and future mobility businesses, and has been refining specific business plans. Hyundai Motor is expanding its existing plant in Alabama, while Kia, a complete vehicle subsidiary of the same group, is reportedly considering establishing a new electric vehicle dedicated plant locally, with candidate sites under review. The industry expects that the eastern part of the ‘Sun Belt’?a region in the southeastern United States including Georgia, where Kia’s U.S. plant is located?will be a strong candidate. There is currently no electric vehicle dedicated plant in South Korea. Various regulations also act as obstacles to aggressive investment by domestic automakers.

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