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(3rd LD) Hyundai Motor union OKs tentative wage deal without strike

All News 15:46 August 28, 2019

(ATTN: ADDS 2nd photo and affiliate Kia wage talks in last 4 paras; UPDATES stock prices)
By Choi Kyong-ae

SEOUL, Aug. 28 (Yonhap) -- Unionized workers at Hyundai Motor Co. have reached a tentative wage and collective bargaining agreement, averting strikes for the first time in eight years, the company and the union said Wednesday.

"The union has decided to accept the company's revised proposals as uncertainties in business environments grow further due to an escalating U.S.-China trade war and Japan's restrictions on exports (of key materials) to South Korea," union spokesman Hong Jae-gwan told Yonhap News Agency over the phone.

In this photo taken Aug. 27, 2019, Hyundai Motor Vice President Ha Eon-tae (L), in charge of the carmaker's Ulsan plant, and union leader Ha Bu-young walk out of the Avante room where they tentatively agreed to sign this year's wage deal at Hyundai's main plant in Ulsan, 414 km southeast of Seoul. (Yonhap)

Hyundai's 50,293-member union will vote on whether to accept the revised offerings on Sept. 2, he said.

The tentative deal came as a surprise to investors as Hyundai workers went without strikes in each of the past seven years before signing a wage deal. Hyundai's union staged an industrial action every year since its foundation in 1987 except for 2007 and 2009-2011.

On Wednesday, the news sent Hyundai Motor shares 2 percent higher to close at 127,500 won, outperforming the broader KOSPI's 0.86 percent gain. Other Hyundai affiliates also advanced, with Kia Motors Corp. rising 2.5 percent to 42,850 won, and Hyundai Mobis Co. gaining 2.7 percent to 247,000 won.

In its revised offerings, Hyundai Motor proposed an increase of 1.7 percent, or 40,000 won (US$33), in basic monthly salary, 1 1/2 months of wages plus 3 million won in performance-based pay and a cash bonus of between 2.2 million and 6.2 million won per person, depending on working years, the company said in a statement.

The company also suggested 15 Hyundai Motor stocks per person.

Analysts expected Hyundai workers will approve the company's revised offerings in next week's vote as they recognize strikes amid growing market uncertainties could deal a heavy blow to the carmaker's bottom line.

"No major delay is expected in the planned delivery of popular models, such as the Palisade SUV, as concerns of production losses driven by possible strikes are now lifted. It will help drive up sales in the second half," Kim Joon-sung, an analyst at Meritz Securities Co., said.

The union initially demanded an increase of 123,526 won in basic monthly pay, and a bonus package worth 30 percent of the company's net income for the one-year period that ends in March next year. Hyundai posted a net income of 1.87 trillion won for the 12 months through March 2019.

Hyundai balked at the demands, citing challenges ahead such as the trade battle between the world's two biggest economies and Japan's export curbs.

The company reported a net profit of 1.95 trillion won in the January-June period, up 27 percent from 1.54 trillion won a year earlier, helped by a weak won and robust sales of new models like the Palisade sport-utility vehicle.

In the first six months, Hyundai sold a total of 2,210,000 vehicles, slightly up from 2,195,000 a year ago. It has achieved 47 percent of its annual sales target of 4.68 million units this year.

Meanwhile, the union of Hyundai's affiliate Kia Motors Corp. is expected to resume wage negotiations with the company in November when a new union leadership is elected, a company spokesman said.

Kia's 29,545-strong union is demanding an increase of 123,526 won per person in basic monthly pay and a bonus package worth 30 percent of the company's operating profit for the one-year period to March, 2020.

For the 12 months to March 2019, Kia posted a combined 1.45 trillion won in operating income.

Instead of agreeing to the union's demands, Kia suggested an increase of 38,000 won in basic pay, 150 percent of monthly salary in performance-based pay and a cash bonus of 1.7 million won per person. Workers rejected the counterproposal.

The company is asking for a wage freeze, citing challenges ahead, such as an escalating U.S.-China trade war and Japan's export curbs.

Hyundai and Kia together form the world's fifth-biggest carmaker by sales.

This photo provided by Hyundai Motor shows the headquarters of Hyundai and Kia in Yangjae, southern Seoul. (PHOTO NOT FOR SALE) (Yonhap)


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