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| Union members of Hyundai Motor take to the streets to join a strike in Ulsan in this file photo taken in 2016. Korea Times file |
By Yi Whan-woo
The union of Hyundai Motor, the flagship unit of Hyundai Motor Group, is against the conglomerate's plan for massive investments into the United States, raising concerns over the carmaker's production which has already been affected by the global chip shortage.
In a statement released Monday, the union said that the conglomerate made a "unilateral" decision to invest 8.4 trillion won ($7.4 billion) in the U.S. by 2025 to produce electric vehicles (EVs), upgrade production facilities and increase its presence in the smart mobility solutions area.
The union argued that management should instead focus on enhancing domestic plants by helping them produce high-value goods, as well as increasing spending on new businesses related to the Fourth Industrial Revolution.
The union of Kia, another Hyundai affiliate, separately asked the group to concentrate on improving the production environment of domestic plants as well as to better ensure job stability.
The investment plan, which was announced last week, was viewed as "politically-motivated," as it came ahead of the scheduled summit on Friday between President Moon Jae-in and U.S. President Joe Biden. Amid various initiatives to rebuild American manufacturing, the Biden administration has been asking allies to invest more in key industries there.
Hyundai said that it will work with the U.S. government and business partners to expand the U.S. hydrogen energy ecosystem.
Taking these decisions into account, the Hyundai Motor labor union said that the firm should be criticized "more harshly" if the investment plan has been prepared as "a gift for the U.S. on the occasion of the summit." The country's top automotive group has been operating two U.S. plants: one run by Hyundai Motor in Alabama and one by Kia in Georgia.
The union went on to say that this number of plants "is good enough," adding that overseas plant operations are facing a global supply shortage and many other problems during the COVID-19 pandemic.
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| Hyundai Motor's Palisade SUVs are parked prepared for overseas shipment at a port in Pyeongtaek, Gyeonggi Province, May 15. Yonhap |
Hyundai Motor Group declined to provide an official response, Tuesday.
But a source familiar with the conglomerate said that the labor unions are making "irrational" demands that can further jeopardize production.
Both Hyundai Motor and Kia have been suspending their plants nationwide temporarily due to the automotive chip shortage, causing a delay in the production of popular models such as the Ionic.
The source pointed out that the unions are "deliberately picking a quarrel," noting that the 8.4 trillion won includes expenditures for projects that already have been underway or have been planned for years.
The projects include the acquisition of a controlling stake in robotics design company Boston Dynamics. This related plan was announced in December 2020.
Also included is Motional, a joint venture between Hyundai Motor Group and Aptiv, a leading automotive technology provider, announced in August 2020.
The source further noted that the U.S. investment is "in a timely manner," in accordance with Biden's push for green technology and other next-generation technologies.
Speaking on the condition of anonymity, an automotive engineering professor at Gangdong University said that Hyundai's investment in the U.S. could be beneficial to its unionized workers in the long-term but they do not seem to understand it.
"The more profit Hyundai Motor Group makes, the more it can spend on the improvement of domestic plants, as demanded by the unionists," he said. "Unfortunately they seem to be too short-sighted."
The professor believes that the unions are trying to "get a head start" ahead of the collective bargaining cycle with management. The negotiations will start this month, with working salaries, overtime payment and working conditions on the agenda.
Kim Jin-woo, an analyst at Korea Investment & Securities, said that the issue of the automotive chip shortage could possibly be resolved from this month, at the earliest, and that it will not affect Hyundai Motor Group's business performance.
His assessment argues against the speculation that Hyundai Motor and Kia ― after seeing their year-on-year operating profit rise by 91.8 percent and 142.2 percent in the first quarter, respectively ― may suffer from the chip shortage in the second quarter, as well.
