Supplies of Korean-made Hyundai products, such as this Elantra GT, had begun to dry up as a result of the strike.
Hyundai and its workers have ended one of the most bitter labor disputes to hit the Korean automotive industry in years – one that threatened to stall the maker’s rapid global growth.
Hyundai has agreed to raise wages for the 41,000 workers at its home market plants – while also accepting an end to overnight shifts at its Korean car plants. A stalemate over those demands had led to a serious of brief work stoppages over the past month that, in turn, disrupted what is already a strained production system.
In total, Hyundai reportedly lost 92 hours of production since the union began its series of strikes on July 13. That resulted in the loss of about 82,000 vehicles, according to the Korean carmaker – worth $1.5 billion.
“Hyundai Motor management is pleased that the labor union members approved the agreements made last week, putting an end to the strikes,” Hyundai management said in a statement. “Our priority now is to normalize production and fulfill customers’ expectations.”
The confrontation followed the election of a hardline leader at Hyundai’s largest labor union. Moon Young Moon had a long personal history with the maker, dating back to company efforts to fire the labor activist back in the 1990s. He promised to resume the confrontational tactics of decades past, if necessary, to win workers’ demands.
In the final settlement, line workers will receive about $100 more in their salary, as well as additional incentives and bonuses. But perhaps the key victory for labor was the agreement to shorten the so-called “graveyard,” or overnight shift. Starting next March, workers who now reported in at 9 PM will end their shift at 1 AM, rather than 8 AM.
The question is what impact that will have on Hyundai which, in 2011 surged to become the world’s fourth-largest auto manufacturing group. The company was already facing trouble meeting strong demand around the world, senior executives in the U.S., notably, warning even before the strike that they would likely lose market share in 2012 because of production constraints.
Some observers believe the maker’s decision to move production out of Korea had shifted the balance in recent labor talks. This year’s strike, they suggest, could result in the further expansion of Hyundai’s overseas manufacturing base. The maker’s U.S. subsidiary, in particular, has been looking for ways to boost production at its Alabama assembly complex.
In the short-term, Hyundai plans to invest 300 billion won, or about $260 million, to upgrade facilities, while workers have agreed to increase the hourly production rate to make up production lost in July and August.
Korean workers have also struck Hyundai’s sibling maker, Kia, as well as General Motors’ Korean operations, in recent weeks. GM workers rejected a tentative settlement reached last month.
Hyundai’s union employees approved their settlement – but only by a narrow 53% margin, which raises the specter of further confrontations in the future.