Hyundai Motor, the nation’s largest carmaker, is expected to suffer from a substantial delay in production, as unionized workers have staged a full-pledged protest Monday for the first time in 12 years.

In attempt to pressurize Hyundai Motor over a stalled wage deal, the workers decided not to show up in their workplaces in Ulsan, Jeonju and Asan, halting operations of all of the carmaker’s production lines Monday. From Tuesday, workers will not work six hours a day for the entire week, the union said. 


In light of the situation, the carmaker is expected to face a disruption in its production amounting to 160 billion won ($144 million) or 7,200 units per day.

The labor dispute is also likely to lead to a further drop in profits, fueling concerns over Hyundai Motor losing its global competitiveness amid the already deteriorating market conditions.

Hyundai Motor has maintained its presence as the world’s fifth-largest carmaker, but it ranked sixth in terms of the total number of vehicles produced between January and July, according to the Korea Automobiles Manufacturers Association.

Experts raised concerns that the delay in production due to the labor disputes could hinder the carmaker’s efforts to restore its production volume in the remaining three months. It could also threaten the competitiveness of the entire car industry in South Korea, they said.

The government urged the carmaker and its union to reach an agreement as soon as possible, saying that the labor dispute could delay exports of Korean vehicles worth $1.3 billion if it remains unresolved this month.

Trade Minister Joo Hyung-hwan said in a statement Monday that the future of Korea’s automobile industry appears grim if the rigid relationship between labor and management continues and workers seek higher wages than those overseas.

“Partners of Hyundai Motor, particularly many small and medium-sized companies are suffering from the suspension of (the carmaker’s) operation,” he said.

The labor union staged the protest after failing to narrow differences with the management over pay.

Late last month, representatives from the labor and the management reached a tentative deal to raise workers’ base monthly pay by 58,000 won and provide 350 percent of their base monthly salary with 3.5 million won in incentives. Workers were to get 10 shares of the company and 200,000 won in gift vouchers, according to the proposed deal. The agreement was put to the vote, but nearly 80 percent of the union opposed the plan.

On Friday, the two sides resumed the wage negotiations but this also ended in failure with the union rejecting the management’s renewed proposal, which was not enough to convince workers, said representatives of the union.

The two sides have held 26 rounds of negotiations so far, with the union staging 19 rounds of partial strikes during the process. The labor dispute has inflicted 2.23 trillion won worth of damages so far, the company said.

An official at the company said that negotiations will resume this week and urged the union to come to a consensus within itself.

Representatives of the labor are reportedly in a tight spot with rank-and-file members opposing the tentative deal reached with the management last month.

By Cho Chung-un (christory@heraldcorp.com)