"Global Supply Chains Are Tough Enough" Hyundai Motor Faces 'Strike Shadow' After 4 Years

Union Holds Strike Vote Today... Concerns Over Worsening Production Disruptions if Approved

[Asia Economy Reporter Yoo Hyun-seok] The Hyundai Motor labor union has entered a strike vote on the 1st due to difficulties in this year's wage negotiations. If the strike vote passes, it will be the first strike in four years since 2018, facing another setback amid semiconductor supply shortages, China's lockdown due to COVID-19, and parts shortages.

With production disruptions and delays in parts suppliers' product deliveries expected, the waiting time for consumers who have already had to wait more than 10 months for cars due to semiconductor supply issues is likely to increase further.

According to the completed car industry, the Hyundai Motor Branch of the Korean Metal Workers' Union began strike votes targeting union members at Ulsan Plant, as well as Jeonju and Asan plants, Namyang Research Center, and dealerships nationwide on this day. The voting results are expected to be announced late at night.

Even if the strike is approved, it will not proceed immediately. If the Central Labor Relations Commission decides to suspend labor-management negotiations on the 4th, the union can legally strike. The union plans to hold the Central Dispute Countermeasures Committee on the 6th to discuss the strike schedule.

The union demanded a basic wage increase of 165,200 KRW (excluding seniority increments), a 30% performance bonus based on net profit, and allowance adjustments. They also included separate demands such as new personnel recruitment, extension of retirement age, job security, abolition of the wage peak system, and establishment and investment in domestic factories related to the future car industry. However, since they failed to narrow differences with the company, there is a high possibility of a strike.

If the Hyundai Motor union approves the strike, it will be the first strike in four years. From 2019 to last year, negotiations were concluded without disputes considering the Korea-Japan trade dispute and the impact of COVID-19. If the strike proceeds, Kia has also announced joint struggles with the union, increasing the likelihood of solidarity.

If the Hyundai Motor union proceeds with the strike, production disruptions are expected to cause damage not only to the company but also to parts suppliers and consumers. In Hyundai Motor's case, a deterioration in performance is inevitable. According to Daishin Securities, from 2000 to last year, Hyundai Motor union strikes caused an average annual production disruption of 63,000 vehicles. The estimated average sales loss was 1.6 trillion KRW. The worst damage occurred in 2016, with production disruptions amounting to 142,000 vehicles and losses of 3.55 trillion KRW.

The same applies to parts suppliers. Automobile parts companies generally align their schedules with completed car manufacturers. When the completed car manufacturer's plant stops, parts suppliers also halt operations. In other words, if the plant stops due to strikes, the damage is directly borne by parts suppliers. A representative from an automobile parts company said, "It depends on whether the strike is full or partial, but once the completed car manufacturer strikes, parts suppliers are directly affected," adding, "Completed car manufacturers do not just stockpile inventory indefinitely, so we cannot deliver unconditionally."

Consumers are expected to face even longer waiting times for new cars, which are already extended. Currently, popular Hyundai models have waiting times of over a year. In particular, the delivery waiting period for popular models such as Tucson and Santa Fe already reaches up to 16 months. If production disruptions occur, the period for consumers to receive vehicles may lengthen further. Professor Kim Pil-su of the Department of Automotive Studies at Daelim University expressed concern, saying, "If the strike proceeds, vehicle production, which has been delayed due to semiconductor supply shortages, will face further disruptions," and "In the worst case, parts suppliers may face insolvency due to inability to deliver."

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