Kia, Workers Union Reach Tentative Wage Agreement in Record Time

Kia and its labor union agree to a collective bargaining agreement in record time, signing the deal today after negotiating through the night.

The agreement was reached with no strike action or drop in plant utilization rate since negotiations began July 7, a Kia spokesman tells Ward’s, noting it took just six meetings over a 16-day period to wrap up the deal.

First-half average operating rate at Kia’s three plants reached 98.2%.

The agreement calls for a 7 million won ($6,660) appreciation bonus for high performance in the first six months of 2011, a monthly wage increase of 90,000 won ($85.60), a special bonus amounting to three months of basic salary and 80 shares of Kia common stock.

The two sides also agreed to work toward establishing 2-shift operations at the auto maker’s three assembly plants, replacing current three. Language in the agreement says “two shifts is ideal.”

A ratification vote will be July 27, the spokesman says.

Analysts attribute the speed of the negotiations to progressive new leadership within the Kia branch of the once-militant Korea Metal Workers Union.

Kia union leaders over the last two years have stressed a willingness to achieve company goals, as well as maintain high production and quality standards.

This is in contrast to 2007, when negotiations dragged on for 157 days.

In 2008, it took 121 days to reach an agreement, and in 2009 the bottom dropped as management and labor remained at loggerheads for 250 days – more than eight months.

“This is the second consecutive year in which we have reached a tentative agreement without strike action,” the spokesman says.

“In the first half of this year, our average operating rate at all three of our domestic plants reached 98.2%, fully achieving our business plan. And that is the reason management has offered a very high performance bonus award.”

The three factories produced 788,400 finished vehicles in the period, of which 540,738 were exported and 247,662 sold domestically.

Among other Korean auto makers, Hyundai continues to negotiate with its union and is hoping to have a contract before the Aug. 1 summer vacation shutdown, a spokesman says.

Workers at GM Korea ratified an agreement earlier this month, and Ssangyong’s union ratified an agreement in May. Renault Samsung does not have a labor union.