The operation came after an eleventh-hour negotiation between the labor-management of the company to narrow their gap on key issues such as work hours, broke down.
There have been concerns in Korea that the illegal strike will deal a heavy blow to Korea’s major carmakers including Hyundai Motor Co.
The impact of Yoosung Enterprise Co.’s strike on Hyundai Motor Group’s carmakers deepened Tuesday, bringing additional assembly lines to a halt.
Industry sources said that unless the auto parts company is fully normalized by the end of this month, the damage to Hyundai, Kia and their auto parts suppliers is estimated to exceed 2 trillion won.
Due to shortages in piston rings produced by Yoosung Enterprise, Hyundai Motor Co. and Kia Motors Corp.’s plants producing diesel engines have been operating at below full capacity.
With diesel engine production being affected, production of models with diesel engines has also been affected.
Kia stopped producing the diesel version of the minivan Carnival at its plant in Gyeonggi Province on Friday, while Hyundai reduced diesel versions of the sport utility vehicles Santa Fe and Tucson ix on Monday.
Unionized workers of Yoosung Enterprise, the country’s largest piston ring maker with 80 percent market share, went on strike on May 16 and two days later began a sit-in strike at the company’s plant in Asan, South Chungcheong Province.
Yoosung Enterprise is responsible for producing about 70 percent of piston rings used in Hyundai and Kia vehicles.
With the companies running out of inventories, the assembly lines for the Starex van and the light truck Porter are also experiencing difficulties.
“The plant producing A-engine had been operating at less than half capacity, but with the stock running low,” a Hyundai Motor official said. The A-engine is a diesel engine used in the two models.
“The company does have A-engines in stock, but the volume of stock is very low.”
The two companies also expect output of bestsellers including the Sportage R compact SUV and the K5 sedan to be affected from Wednesday.
According to the company, if the situation continues, it could result in 48,000 units in lost production and 827 billion won ($756 million) in lost revenues by the end of the month.
In addition, troubles at carmakers are also affecting other parts makers.
With Yoosung Enterprise and its union failing to reach a compromise, concerns are mounting that the labor dispute might be prolonged despite police’s intervention in the case.
The police took the action after a court issued an arrest warrant for two union members alleged to be the driving force behind the sit-in strike.
By Choi He-suk (firstname.lastname@example.org