South Korea's Biggest Car Makers Face Fresh Strikes
07/16/2012| 07:39am US/Eastern
--Unions at Hyundai Motor, Kia Motors and GM Korea plan further strikes
--Strike action remains limited so far, with no major output losses
--Analysts say prolonged strikes could have an impact on sales for the third quarter
(Adds analyst comments in 5th, 8th paragraphs, production losses at Hyundai and Kia in 9th paragraph, Hyundai union spokesman comment in 10th paragraph, financial workers' plan to strike in last paragraph.)
By Kyong-Ae Choi
SEOUL--South Korea's three biggest car makers face the threat of significant lost production after their unions said Monday they will extend recent strike action in a continued flare up of labor unrest after years of output relatively uninterrupted by industrial disputes.
Unionized workers at Hyundai Motor Co. (>> Hyundai Motor Co), the country's largest car maker by sales, will go on strike for eight hours on Friday as they continue to seek higher pay and better working conditions. The union staged a strike on July 13, the first at Hyundai's South Korean plants in three years.
Kia Motors Corp.'s (>> Kia Motors Corporation) labor union has scheduled an eight-hour strike at the company's domestic plants for July 20 after a strike on July 13, the first in two years.
Meanwhile, workers at General Motors Co.'s (>> General Motors Company) South Korean unit plan to strike for several hours on both Tuesday and Friday. GM Korea's union held similar strikes on three days earlier this month. The company faced no strike action in 2009 and 2010, and only a brief strike last year.
Analysts said the relatively short duration of the strikes so far and those planned means that output can be made up for through overtime work, but if the disputes continue into August they may have an impact on sales for the third quarter.
At Hyundai and affiliate Kia the unions are asking for a monthly pay increase of 151,696 won ($133) and for 30% of the companies' net profit for performance-based pay. The unions also want an end to night shifts, with all staff leaving assembly lines before midnight after eight hours of work.
The companies are reluctant to make changes to shifts that would lead to a reduction in output at a time when demand remains strong and inventory low.
"To adopt the daytime-only shift system, workers would have to improve productivity by increasing the number of vehicles built per hour or the company would have to expand production capacity by hiring more workers," Cho Seung-woo at Woori Investment & Securities said, adding that it'll be hard for management and the unions to find common ground.
Hyundai and Kia said they suffered a combined production loss of 7,000 vehicles valued at 135 billion won ($118 million) as a result of the July 13 strikes.
Hyundai workers will also refuse to work overtime between July 25 and July 27, union spokesman Kwon Oh-il told Dow Jones Newswires. But the union "will continue talks with the company on July 18, 24, 26 to reach an agreement," he said.
GM Korea said it suffered a total production loss of 3,700 vehicles as a result of the recent strikes. Its union is demanding a monthly salary increase of 151,696 won, a permanent transition to a two-shift work system, and bonuses equivalent to five months of wages.
Car makers are not alone in facing strike action in South Korea, which has a history of labor unrest.
Last week, the union representing banking workers voted for its first strike in 12 years to protest the possible sale of the government's stake in Woori Finance Holdings (>> Woori Finance Holdings Co Ltd).
Write to Kyong-Ae Choi at firstname.lastname@example.org
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