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| Members of Hyundai Motor union hold a rally at the company's plant in Ulsan, Oct. 31, opposing the company's plan to create low-cost jobs. / Courtesy of Hyundai Motor labor union |
By Nam Hyun-woo
Hyundai Motor should scale down its workforce to weather through the global automobile industry downturn, experts and analysts said Monday. They say the drastic restructuring is a must for the world's No. 5 automaker to stay competitive in the "future mobility" market.
This argument came amid global carmakers' sweeping moves to restructure or downsize their workforces to refurbish and streamline their manufacturing portfolio suitable to eco-friendly cars. Since Hyundai is suffering from declining profitability and seeks to rebound with green vehicles, it should undergo radical restructuring, the experts said.
"Hyundai Motor is running at over-capacity, with its sales volume far below its manufacturing capacity," Korean Academy of Motor Industry Chairman Kim Yong-jin said.
"Like other global carmakers, Hyundai seems to be under pressure for massive restructuring. With the industry trend toward electric vehicles (EVs) and fuel-cell vehicles, Hyundai also has to shift its manufacturing lines focus to those cars, but that will require restructuring."
According to Hyundai Motor Group, Hyundai Motor and its affiliate Kia Motors can produce 9.04 million cars a year. Last year, the two brands sold 7.4 million vehicles worldwide, meaning the workforce and facilities capable of producing an additional 1.64 million cars were idle.
Despite other carmakers' moves to restructure their workforces, Hyundai Motor did not join the move last year.
The only restructuring the carmaker made was a cut in the hourly manufacturing output of a truck plant in Jeonju, North Jeolla Province, to eight vehicles from 12.39, and the reallocation of nearly 300 employees at the plant to other manufacturing lines.
"That could be the only restructuring option Hyundai can take without causing big political trouble," Kim said. "Due to the company's labor-management relations, Hyundai Motor has to receive the union's consent on adjusting its manufacturing volume. It seems Hyundai Motor's restructuring is not an economic matter, but a political one."
Kim expects that Hyundai could only start restructuring after it checked the market performances of new its new cars, including the Palisade full-size SUV.
"The core reason for Hyundai's declining sales last year was the company's miscalculation in meeting customers' demand, which is a fault of the management" he said. "To justify its restructuring, the company first has to recover its sales with the new cars and then begin talks for restructuring."
Earlier this month, Ford and Jaguar Land Rover announced job cut plans to transform their businesses. Ford said it will slash "thousands" of jobs as part of an overhaul that could result in plant closures and the discontinuation of some models, while Jaguar Land Rover said it will cut 4,500 jobs out of 42,500.
General Motors have already announced a restructuring plan, cutting up to 14,000 jobs in North America and closing up to five plants across the world.
While other carmakers were busy downsizing their workforce and facilities, Hyundai is taking the opposite approach, expanding its facilities in India this year to produce more EVs.
"For years, global carmakers such as General Motors and Renault have been making aggressive efforts to restructure their workforces," an industry analyst at a Seoul-based brokerage said. "While Hyundai is slow in its restructuring effort, its structure of high cost and low productivity may drag down the automaker from competition in the rapidly changing industry. Time is running out for Hyundai."
