Will Hyundai Have Labor Peace?

Posted by: Ihlwan Moon on December 24, 2009

Share investors welcomed an agreement by Hyundai Motor’s unionized workers to accept a wage deal, ensuring that 2009 will be the first strike-free year in 15 years for South Korea’s largest auto company. Hyundai shares hit a record high after the union said on Dec. 24 the majority of its 45,000 members voted to support a tentative deal reached between the union and management three days earlier.

The agreement is yet another achievement for Hyundai which is widely expected to report a record profit this year. Hyundai has been a hotbed for labor strikes in Korea, with its union, the country’s largest, going on strike every year except for one since it was set up in 1987. Today, investors pushed Hyundai’s stock 3.9% higher, extending year-to-date gains to a remarkable 206%.

Under the wage plan, basic salaries will remain frozen while the company will make a one-time payout of the equivalent to three months of average salary and 40 Hyundai shares to workers. Hyundai’s new union leader Lee Kyung Hoon has refrained from involving his union in labor strife linked to political issues such as a free trade deal since his election last September. Investors will certainly welcome Lee’s leadership if Hyundai can continue to avoid output disruptions due to labor disputes next year.

Reader Comments

DanTe

December 24, 2009 3:21 PM

Move some production out of Korea and the militant unions will start to learn. If not, just move it all out of Korea. Wait until the union imbeciles starve to death. Then bring back the production. Repeat as needed - depending on how slow in the head these workers are.

Strategery

December 25, 2009 2:57 PM

Wrong again, DanTe. Hyundai has record profits AND a strong union... They do well because they make good vehicles at great prices. I blame management and poor government policies (specifically trade) for the demise of US automakers...

C. H. Ng

December 25, 2009 8:54 PM

S. Korea is one of the few countries famous (or infamous) for their labor strikes. A strong labor union is both good & bad primary to the workers but one strike too many is bad for the companies which employ them as it will affect greatly on the productions & profits. A loss making company will not be able to pay well or take care of her workers & ultimately it's the latters who will suffer more. So why rock the boat if it's sailing smoothly?

LadyRebel55

December 25, 2009 11:25 PM

We only have a Sonata building factory in America. We need more jobs here. Hyundai would be very welcome in the U.S. I agree with DanTe. We lost our jobs to lower priced workers overseas. Now the tables are turning.

DanTe

December 27, 2009 1:30 PM

To Strategery: who's talking about American automakers? But don't ever change. I've come to depend upon your 100% track record - of being totally wrong. I can literally "BANK" on it :) Got any corporate predictions? So you think the American car companies are going to fold? Come on, help us out here.

John Ryan

December 27, 2009 7:24 PM

What's amazing is companies like Hyundai come to America and are union free, thanks to the poor labor laws in our country. Hopefully this Congress will make some much needed changes to labor law to permit their U.S. workers to also have a voice at work.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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