Another round of labor woes is looming at Hyundai Motor Group, raising the possibility that the Korean auto giant will seek to shift production to its factories overseas, especially in the all-important U.S. market.
Before resuming wage talks with the management on Thursday, union members at Hyundai’s Korea plant staged partial strikes on Tuesday and Wednesday that cost the automaker 85.6 billion won ($76.3 million) in lost output.
And two U.S. states ― Georgia and Alabama ― are eyeing the escalating labor disputes as a new opportunity for them to host a possible expansion of their existing Hyundai plants.
Hyundai Motor and Kia Motors operate their U.S. plants in Alabama and Georgia, respectively. But the Korean union’s seasonal strikes have badly affected the U.S. supply every year.
Last year, Hyundai suffered the costliest walkout in its history that caused a production shortfall of 82,088 vehicles and an estimated 1.7 trillion won in lost sales.
But from this year, the carmaker has started offsetting the production loss in Korea with upped production in the two U.S. plants and those in other markets.
According to industry sources, Georgia Governor Nathan Deal met with Hyundai Motor Group chairman Chung Mong-koo on Wednesday in an unofficial stopover in Seoul before his China and Japan tour.
During their meeting, the governor is said to have asked the Hyundai chief to consider expanding Kia Motor’s Georgia factory that was established in 2009.
“The two states ― Alabama and Georgia ― are moving quickly to lure a possible third factory. The recent Seoul visit by the Georgia governor was also aimed at taking an edge in the competition with Alabama,” said an industry source.
Hyundai on Thursday confirmed their meeting but declined to further elaborate on the issue.
Meanwhile, Alabama Governor Robert Bentley is also planning to visit Korea and meet Chung within the year as early as October, sources said. Hyundai has operated an Alabama plant since 2005.
“Ahead of midterm elections next year in the U.S., the political community seems to be considering Hyundai’s possible production expansion there as an opportunity for them to be reelected,” said another source.
“Even though in Korea, Hyundai has denied any related speculation, the situation could change if the current wage talks fail and the strikes are prolonged.”
Hyundai and Kia’s labor unions have demanded a pay increase of 130,498 won a month and for 30 percent of net profit to be distributed to workers. The talks started May 28 for Hyundai and July 2 for Kia.
The unions have faced public criticism for frequent labor strikes despite their workers’ relatively high salaries amounting to an annual average of 94 million won ($84,000) and their low labor productivity.
According to data from the Financial Supervisory Service, an index measuring a carmaker‘s productivity, known as hour-per-vehicle, was 30.7 hours for Hyundai Motor. It lags behind those of global rivals GM with 20.6 hours and Toyota with 27.6 hours.
By Lee Ji-yoon (firstname.lastname@example.org