Korean Economy News
Hyundai Motor moves to rationalize its home base after China
2019-03-08


Lee Jae-cheol and Kim Hyo-jin



Hyundai Motor Co. is working to rationalize its manufacturing base in Korea after making a similar move with its money-losing Chinese operations to address weakening productivity and competitiveness that have been shaking its global presence.

A representative management-labor council discussed challenges and various options including adjustments to the factory lines and work force, and plans to hold further meetings through next week in hopes of coming to a settlement, according to several inside sources.

The council consists of 13 representatives each from management and labor, with five outside members serving advisory roles. It is the first council of its kind in the automaker’s 51-year-old history.

On Thursday, the company announced it would halt production at one of its five plants in China next month due to the declining sales in the world’s largest car market. It already let go 2,000 employees in the country as part of broad restructuring efforts.

The automaker said it is also considering options to streamline its Korean operations as it grapples with the same problem of low productivity and high labor costs.

“We cannot delay addressing rigidity in labor terms and productivity issues from labor excess regardless of union opposition,” one source from the council said. Hyundai Motor’s union is aligned with the country’s most contentious union umbrella group Korean Confederation of Trade Unions.

In its first mass-scale relocation in October 2018, Hyundai Motor transferred 210 of assembly workers at its plant in the southwestern city of Jeonju to other lines.

Hyundai Motor has about 68,870 workers on payroll at home, with 2,881 hired on a contract basis.

The Korean auto giant reported its first quarterly net loss in the final quarter of 2018 and ended the year at its worst since adopting new accounting standards in 2010 as it struggled in two of its biggest markets, China and the United States. Sales also have been falling at home as the household brand is increasingly losing ground against foreign names.

Korea’s car shipments?mainly represented by Hyundai Motor and its smaller sibling Kia Motors?slipped two notches over the last two years to seventh place in 2018, behind Mexico and India.



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