Hyundai Motor’s (005380.KS) unionized workers in South Korea voted to go on strike for a fifth year in a row after wage talks broke down, adding to the automaker’s troubles as it battles a sales slowdown.
A prolonged strike could hurt sales of high-demand cars such as the Tucson sport utility vehicle as the company heads for an expected 10th consecutive drop in quarterly profit in the April-June period, weighed by an emerging market slowdown, analysts said.
Hyundai Motor, the world’s fifth-biggest carmaker together with affiliate Kia Motors (000270.KS), posted a 0.9 percent fall in sales in the first half.
Union negotiators led by Park You-ki on Thursday decided to stage a partial strike for four days next week after 77 percent of Hyundai’s 48,806 unionized workers in South Korea approved the strike action, the spokesman said.
“The overwhelming support is a natural result of the anger of our 48,000 union workers,” the union said in a statement.
Hyundai Motor shares ended down 3 percent and Kia Motors shares declined 1.3 percent in a wider market .KS11 that was up 0.2 percent on Thursday.
“A strike is an annual event for Hyundai Motor, but this is weighing on investor sentiment,” Eim Eun-young, an auto analyst at Samsung Securities, said.
The company has been hit by strikes in all but four of the union’s 29-year history. The automaker usually makes up for lost production later each year.
This year, the union is demanding a 7.2 percent rise in the basic monthly wage and performance pay totaling 30 percent of the automaker’s 2015 net profit.
Other demands include giving employees the right to refuse to be promoted so that they can maintain their union membership.
The company is pushing to freeze wages, revamp the wage structure and expand the so-called “peak-wage system,” the union said.
Citing ongoing business uncertainty, Hyundai Motor said it expects that “the union would cooperate in reaching an agreement as soon as possible through a reasonable dialogue.”
Wages talks were underway at Kia Motors and if the union failed to reach a deal it planned to hold a strike vote on Aug. 8, a union official said.
Source: Reuters
