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Carmakers face output cut on parts firm strike

Police launched a probe Monday into an illegal strike by an auto parts manufacturer in Asan, South Chungcheong Province, which is prompting work suspension at plants of the nation’s major carmakers including Hyundai Motor in Ulsan.

The police said they are considering requesting an arrest warrant for the company’s labor union leaders, as well as for key players behind the strike and the illegal occupation of the workplace.
A Hyundai Motor assembly line in Ulsan (Yonhap News)
A Hyundai Motor assembly line in Ulsan (Yonhap News)

The management of Yoosung Enterprise filed a complaint with the prosecution against the labor union on charges of obstructing business, claiming that about 600 union members are blocking non-unionized workers’ entry into the company and its factory.

A police official said it is against the law for union members to block the entry of other workers, although they took this action in response to the company’s shutdown of the factory.

Since May 18, labor and management have negotiated key issues including work hours, but have made little progress.

As the deadlock has been prolonged, there are mounting concerns that the strike will deal a severe blow to the nation’s auto industry, which is enjoying a sales increase in domestic and overseas markets.

Five major automakers, including Hyundai Motor, have faced manufacturing suspension of some of its vehicles in the wake of a labor strike in a leading auto parts producer, industry sources said.

According to the automotives industry, the five carmakers are expected to suffer reductions of about 50,000 units in production this month. Yoosung supplies key engine components to the five automakers.

In particular, Hyundai Motor and Kia Motors are expected to be hard hit by the strike, as they are being offered about 70 percent of engine-related components from the subcontractor.

The number of vehicle units which could be affected by the strike is projected to amount to 80 percent of the total 50,000 units, said staffers of the two affiliated carmakers under the wing of Hyundai Motor Group.

Since last Sunday, Hyundai Motor has faced a sectional suspension of production lines in its Ulsan factory for sport utility vehicles such as Veracruz, Santa Fe and Tucson ix.

The automaker expects that the number of SUV and sedan models hit by the strike will increase. The sedans will likely include popular models like Genesis and Sonata.

Kia Motors also predicts that its production of Carnival and Sportage R will be slashed sharply.

GM Korea, which has sustained its normal production backed by its inventories, is expected to suffer sectional suspension from this weekend.

The carmaker is using 100-percent auto parts provided by Yoosung Enterprise for production of Orlando and Cruz models.

Renault Samsung Motors and Ssangyong Motor could also be negatively affected by the strike.

Yoosung Enterprise is the nation’s leading automobile component producer, headquartered in Asan, South Chungcheong Province.

Its union launched a sit-in protest by occupying its main production plants last week as they failed to find common ground with management on working conditions and salaries.

The subcontractor specializes in producing piston rings, cylinder liners and other key components required for manufacturing car engines.

Of its five plants, the company shut down two, located in Asan and Yeongdong, in response to the labor dispute.

The Korea Employers Federation estimated that the labor strike has already cost Yoosung Enterprise more than 110 billion won ($100 million) in lost output.

By Kim Yon-se (kys@heraldcorp.com)
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