Typhoon Hits Hyundai Amid Stormy Labor Negotiations

Hyundai plants at the automaker’s industrial hub in Ulsan were flooded by Typhoon Chaba as the violent storm struck Korea’s southeast coast on Wednesday with heavy rains driven by winds up to 120 mph (193 km/h).

But unionists engaged in wage negotiations threaten even a worse storm is coming if the government tries to intervene in the strike-ridden talks with Hyundai management.

On the Monday before the storm the workers, along with all other Koreans, enjoyed the national holiday of Foundation Day, commemorating the founding of the nation some 4,500 years ago.

On Tuesday, a day before the typhoon swamped Ulsan and the neighboring metropolis of Busan, there were signs the union was being conciliatory.

That day the Hyundai Motor Branch of the Korea Metal Workers Union advised its members to stand down from any strike action for the full week while management was given a chance to meet their wage demands.

However, union leaders also advise partial strikes will resume Oct. 11 if a deal is not reached.

But the leaders’ attitudes had changed by Wednesday, when the typhoon closed the ports at Ulsan, Busan and Changwon and flooded two of Hyundai’s seven plants in Ulsan.

The KMWU announced that if the government tries to intervene in the Hyundai workers’ possible strike action, then the Kia Motors Branch of the KMWU and unions of other Hyundai Motor Group affiliates that include Hyundai Mobis, Hyundai Wia, the Hyundai Rotem railcar subsidiary and others would join the Hyundai auto workers in a general strike.

Government Driving Wedge?

A strike by Hyundai Motor workers defying the government’s back-to-work order would be illegal. The other unions also would be acting illegally by engaging in a general strike for political reasons not related to bargaining over wages and working conditions.

Union spokesmen say the KMWU is ready to defy the threatened back-to-work order because they see it as government intervention in a strike that is legal under Korean law. They contend such an order would render what is a legal strike action to be illegal by the arbitrary stroke of the labor minister’s pen.

Union officials claim the government actually is trying to push its own agenda for establishing a performance-based wage system in all Korean businesses, an issue being discussed in the current Hyundai negotiations. The KMWU strongly opposes the government’s wage-reform initiatives, as is the Korean Confederation of Trade Unions, the national umbrella union group to which the KMWU belongs.

Some opposition members of Korea’s National Assembly also are decrying the threatened emergency intervention. They argue the government is making relations between organized labor and management even worse, approaching the low days of the 1997-1998 Asian financial crisis.

Union members went on strike against all of Korea’s automakers during that period. Two of them, Hyundai rival Kia and the fledgling Samsung, went bankrupt and were put on the auction block.

Hyundai acquired Kia in 2008, securing a 51% share of common stock and beating out Ford, the next-closest bidder. Since then Hyundai’s shares in Kia have been reduced to about 34%. Samsung was acquired by French automaker Renault.

Hyundai has issued no statement regarding the temporary truce declared by the union on Tuesday, and spokesmen did not answer WardsAuto questions about the wage negotiations.

However, Hyundai management did send a letter to its unionized workers on Tuesday, pleading for a satisfactory resolution of the wage talks.

The letter noted that the Federation of SMEs (small and medium-size enterprises) stated publicly they were considering boycotting Hyundai, a prime customer of most of them. Many SME businesses are direct or indirect suppliers of parts and services to the automaker.

Analysts believe the impact of the partial strikes is the main cause of Hyundai’s September declines of 20% year-on-year in both domestic and export sales.

The sharp sales drop is attributed to the automaker’s inability to fill orders because of the cumulative effects of the frequent walkouts, as well the sluggish economies in Korea and emerging overseas markets.

Hyundai is downplaying the seriousness of flooding and storm damage at its Ulsan plants and the adjacent shipping port, saying only that the typhoon has temporarily interrupted production.

Workers say nature is taking the strike action for them, reducing production and putting more financial pressure on Hyundai management to come to a resolution.