Hyundai Motor Union’s Moderate New Leader May Cut Strike Losses

Hyundai Motor Co. (005380) may lose fewer days to strikes after workers returned to office a former union head who led them during the longest stretch of uninterrupted production at South Korea’s largest automaker.

Lee Kyung Hoon won 52 percent support to defeat Ha Bu Young for leadership of the 47,000-member union, the union’s website reported.

Lee, 52, will replace Moon Yong Moon, who over the past two years came to be considered a sign of resurgent militancy at South Korean labor unions amid a shift of production overseas. Hyundai Motor, which suffered strikes in 22 of the past 26 years, saw no work stoppages when Lee’s led the union from 2009 to 2011.

“Lee asserts utilitarianism and is known to be a shrewd negotiator who gets the union’s voice heard without staging strikes,” Lee Sang Hyun, an analyst at NH Investment & Securities Co., said by phone. “Lee’s victory is good news for both investors and the company.”

The Seoul-based carmaker has lost production of more than 1.3 million vehicles valued at 16 trillion won ($15 billion) due to strikes since the union’s formation in 1987, according to company estimates. Past worker protests have led to clashes between police and unionists armed with steel pipes and Molotov cocktails.

Hyundai, which has suffered strikes in all but four years since its formation, lost output of more than 215,000 vehicles equivalent to 4.4 trillion won of sales due to stoppages during Moon’s term.

Reducing Shifts

Nationwide, the number of work days lost due to labor disputes more than doubled last year from two years earlier, according to data from the Ministry of Employment and Labor.

Lee, who joined Hyundai in 1986, has promised to cut working hours to 40 a week for all employees by reducing afternoon shifts by an hour, increase base salaries and bonuses, eliminate conditions for employees to keep working until the age of 60, and to have the company distribute 60 shares to each worker, according to his campaign website.

Hyundai’s profit for the three months ended Sept. 30 increased for the first time in four quarters, climbing 5.6 percent from a year earlier to 2.14 trillion won, the company said Oct. 24. Rising sales in emerging markets including China, where deliveries jumped 15 percent, helped cushion the fallout from a three-week strike at Hyundai’s South Korean plants that began Aug. 20.

Challenges Overseas

Hyundai’s South Korean workers approved a wage agreement on Sept. 9 that raised annual pay by 28.8 million won per worker, including an average increase in base salaries of 5.1 percent, according to the union. The pact will expire after one year.

The automaker faces mounting challenges overseas as a strong won, which has gained about 28 percent against the yen in the past year, hurts its competitiveness against Japanese manufacturers in markets including the U.S.

Hyundai fell 2.2 percent to 248,500 won at the close in Seoul trading on Nov. 8, compared with a decline of 1 percent for South Korea’s benchmark Kospi index. The shares have climbed 14 percent this year.

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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