SOUTH KOREA: Hyundai unions plan more strikes to protest $10B land deal

Monday 29 September 2014

Date: 26 September 2014

Type: News

Source: Auto News

Keywords: Trade unions, Hyundai

TOKYO — Workers at Hyundai Motor Group pledged more strikes as the two carmakers and their biggest supplier finalized a $10 billion purchase of plum real estate in Seoul for a new headquarters.

The boards of Hyundai Motor Co., partner Kia Motors Corp. and group parts supplier Hyundai Mobis Co. signed off on the land deal earlier today, divvying the mammoth costs among them.

Hyundai Motor will foot 55 percent of the 10.55 trillion won charge, Kia will pay 20 percent and Mobis will pick up the rest, the companies said in a regulatory filing.

Purchasing the plot in Seoul’s ritzy Gangnam district at a price more than triple its appraised value has emerged as a flashpoint in ongoing wage talks with the companies’ unions.

The decision also erased an equivalent of the purchase price from the three companies’ market values since the plan was announced last week. Shareholders fret the exorbitant mark belies corporate governance issues at the family-dominated conglomerate headed by billionaire Chairman Chung Mong-koo.

The Korean Metal Workers’ Union, which represents workers at both Hyundai and Kia, staged partial strikes four days this week. Workers at Hyundai and Kia plan more partial walkouts Monday through Thursday next week, the union said.

“Many of the workers are outraged,” a union spokeswoman said. “We’re going to continue this struggle.”

“We understand Hyundai Motor wants to build up its brand image. But Hyundai could make better choices,” she said. “They turn around and buy this building in the middle of our negotiations.”

The unions also said they plan a demonstration outside the Hyundai Motor Group’s current twin-towered headquarters, not too far away from the Gangnam plot into which they plant to move.

Better uses?

The union, which has been negotiating wages at Hyundai and Kia since June 3, said the huge sum spent on the building site would be better spent addressing other issues, such as the regularization of lower-wage contract workers or the recalculation of ordinary wages to include bonus pay.

“This is about more than a shiny new building,” the spokeswoman said. “They say they wanted a better office. A real world class company would first own up to its obligations to its workers.”

Hyundai and Kia say the walkouts are part of the continuing wage talks, not a direct reaction to the land deal. Indeed, workers also laid down tools at Hyundai on Aug. 22 and 28.

“We’ve seen that the union has reacted to the issue, referring to it to reaffirm their earlier position on certain demands,” Hyundai spokeswoman Song Meeyoung said.

“However, considering that the wage talks have been going on since June, it would be accurate to say that it’s an extension of the ongoing wage talks,” she said.

Neither company said how many units of production were lost.

Pay calculation

A main crux of wage talks is the method of calculating ordinary pay, which is used in turn to calculate extras such as overtime and severance. The union wants bonus pay included in the count.

South Korea’s Supreme Court ruled last December that bonuses must be rolled into base pay, prompting the unions to sue the automakers to adjust their pay calculations in accordance.

The unions and management are also sparring over the regularization of contract workers, who work for much lower pay and benefits. The unions charge that the automakers are ignoring Korean labor law requirements that such contract workers be automatically reclassified as full-time employees after two years on the job, according to local media reports.

The talks are part of annual wage negotiations that often drag on for weeks and erupt in sporadic strikes. A long-running dispute in the summer of 2012 erased production of 82,000 vehicles at Hyundai and crimped new-car supply at U.S. dealers.

Hyundai Motor Group says it needs the land as an “integrated control tower” to centralize global management and deliver synergies among 30 group affiliates expected to move there.

The group says it will also “enhance the brand image.”

The building backlash comes as high wages and a strong currency undercut the competitiveness of building cars in South Korea, especially for export. Both Hyundai and Kia plan new factories in China and Mexico, low-wage countries closer to consumers.

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