Hyundai Transys' union strike disrupts Hyundai Motor exports

The ongoing strike by the Hyundai Transys labor union, a key affiliate of Hyundai Motor Group, is causing major disruptions to Korea's automobile export sector. With the strike now entering its second month, production lines at the Hyundai and Kia plants are being halted due to a severe shortage of automatic transmissions, which are essential components for vehicle assembly.

The strike began on October 8 at Hyundai Transys’ Jigok plant in Seosan, South Chungcheong Province, and has continued without resolution. Prior to the strike, the plant produced 15,000 transmissions per day, but the disruption has led to a significant slowdown in production at Hyundai’s Ulsan Plant 1 and Kia’s Gwangju plant, with thousands of units going unproduced daily.

The stoppage has particularly affected Hyundai Motor's popular 'Kona' model, which ranked third in vehicle exports from January to September 2024. This halt in production comes at a time when Korea's automobile exports were performing strongly, setting record highs as of October. However, the strike is now putting a strain on this vital sector of the economy.

The core issue behind the strike is performance-based pay, with the union demanding 2% of sales, equating to approximately 240 billion won—double the company’s operating profit from the previous year. This is considered an excessive demand, especially given that companies typically pay a portion of their profits as performance bonuses. Additionally, Hyundai Transys faces the significant challenge of transitioning its production from internal combustion engine transmissions to electric vehicle transmissions, requiring considerable investment.

As global carmakers such as Volkswagen also face difficulties amid rising labor costs and shifting industry paradigms, the strike at Hyundai Transys raises concerns about short-sightedness. The demand for immediate financial gain may ultimately hinder long-term growth, especially as the auto industry undergoes rapid transformation toward electric vehicles.