Hyundai Motor Co.’s union workers in South Korea agreed to end a three-week strike that cost more than 1 trillion won ($921 million) in lost output after they accepted the carmaker’s proposal to increase wages.
Management’s offer to raise base salaries by 5.1 percent was approved in a vote yesterday by the Seoul-based company’s 46,000 guild members, union spokesman Kim Gi Hyuk said yesterday.
The stock rose in Seoul as the accord ended the second disruption this year, a time when the weaker yen is giving Japanese carmakers an edge in global markets. Hyundai Motor is so prone to disputes that employees have gone on strike in all but four years since the union’s formation in 1987, causing estimated lost production exceeding 16 trillion won.
“The strikes were definitely a risk factor to investors, so with that gone, the shares will now look more appealing,” said Kwon Soon Woo, an analyst at HI Investment & Securities Co. “The relatively early end of strikes will help the company post profits that are better than last year’s.”
Hyundai Motor shares rose 1 percent to 250,500 won at 10:01 a.m. in Seoul trading, while Korea’s benchmark Kospi index rose 0.7 percent.
The wage agreement includes a 97,000-won increase in monthly base salary, and bonuses worth 3 1/2 months of wages plus 5 million won in cash, according to a Sept. 6 statement on the union’s website. This is equivalent to an average of 28.8 million won extra per person, according to the statement.
The partial strikes, which began Aug. 20, have resulted in an estimated 50,191 vehicles in lost production, according to the company. Together with the union’s boycott of extra weekend shifts earlier this year, the cost for this year’s labor strife adds to more than 2.7 trillion won.
The union refused extra work for 13 weekends beginning March 9, demanding higher compensation on those shifts. The stoppage, although not a legally sanctioned strike, cost Hyundai 1.7 trillion won in lost production, according to the company’s estimates.
The automaker has sought to reduce the effect of strikes in South Korea by expanding production in the U.S., China, India and Turkey during the last decade.
Worldwide, Hyundai sold 3.1 million vehicles for the first eight months of this year, a 12 percent increase from a year earlier, according to the company’s regulatory filing on Sept. 2. The automaker will probably report a third-quarter profit of 2.1 trillion won, according to the average of 21 analyst estimates compiled by Bloomberg.
The union at Kia Motors Corp., an affiliate of Hyundai, will stage partial strikes tomorrow to Friday, according to a statement on its website. The company and its union will hold wage talks today.
The nation’s second-largest automaker has lost 352 billion won or 19,822 units in production as of Sept. 8 from strikes that began on Aug. 21, Kia said in an e-mailed statement yesterday.