Hyundai, GM Korea unions seek bonuses over US tariff risks

South Korea’s Hyundai Motor and GM Korea are facing pressure from labor unions seeking substantial wage increases and bonuses.

These demands arise as both automakers deal with potential challenges from proposed US tariffs on automobile imports.

Hyundai’s union has requested that 30% of the company’s 2024 net profit be allocated as bonuses, estimated at 4 trillion won (US$2.9 billion).

However, the company has indicated that it may not fulfill this demand due to external risks, including a potential 25% tariff on car imports proposed by the US.

Hyundai exports 54% of its vehicles to the US, making it particularly vulnerable to such measures.

At the same time, GM Korea’s union is asking for 15% of the company’s net profit as incentives, along with a bonus equal to 500% of monthly wages.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ Labor disputes at Korean automakers follow historical pattern amid new global pressures

The current labor demands at Hyundai and GM Korea continue a decades-long pattern of confrontational labor relations in Korea’s auto industry, but with heightened stakes due to tariff threats.

Hyundai has faced recurring labor actions since the late 1990s, including a significant 2016 walkout that marked its first full-scale strike in 12 years 1.

Previous labor disputes have caused substantial production losses, with Hyundai losing over 117,000 vehicles worth more than $2.5 billion during 21 partial strikes in 2011 alone 1.

Korean automakers have historically made major concessions to maintain labor peace, with average annual worker salaries at Hyundai reaching $87,000 by 2015, creating expectations for continued compensation growth even during challenging business periods 1.

The timing of these demands is particularly problematic as Korean vehicle exports to the US have already plunged 32% in May compared to last year, according to the Ministry of Trade, Industry and Energy.

2️⃣ Tariff threats accelerate automakers’ global production rebalancing strategy

The potential 25% US auto tariffs threaten to disrupt a carefully calibrated global manufacturing strategy that Korean automakers have developed partly in response to domestic labor challenges.