Hyundai Motor’s New Union Leader Demands End of Overnight Shift

Nov. 17 (Bloomberg) -- Hyundai Motor Co.’s new labor union chief said workers will demand that South Korea’s biggest carmaker end overnight shifts and improve medical benefits.

The union will also insist on a review of the carmaker’s overseas expansion plans, said Moon Yong Moon, who beat incumbent Lee Kyung Hoon in this month’s election to lead the roughly 45,000-member union for a two-year term. He said the union would “fight for its rights,” when asked whether the organization may strike.

Hyundai had its longest stretch of uninterrupted production under Lee, who led the union from 2008. Before that, the union staged strikes in every year except one since its establishment in 1987, costing $10.2 billion in lost sales, the carmaker estimates.

“It won’t be good for the company if it has to spend energy dealing with these issues,” said Lee Jin Woo, a senior fund manager at Seoul-based KTB Asset Management Co., which manages the equivalent of $6.2 billion in assets, including Hyundai shares. “It will definitely be unfavorable” should the union reverts to industrial action, he said.

Hyundai Motor had annual operating profit of about $49,730 per employee, the highest among the world’s five largest automakers by market value and more than Toyota’s $17,250 and the industry median of $36,200, according to data compiled by Bloomberg.

“The company’s profit is not being fairly distributed to the workers,” Moon, 45, said yesterday in an interview at Hyundai’s plant in Ulsan, South Korea. “For the overnight shift, we go in at 5 p.m. and get out at 8 a.m.” The working hours are bad for workers’ health and violate their human rights, he said.

Hyundai declined in an e-mail to comment on Moon becoming the union’s leader.

Profit Gain

Profit rose 21 percent in the third quarter from a year earlier, helped by sales of Sonata sedans and Tuscon sport- utility vehicles, the Seoul-based automaker reported.

Chief Financial Officer Lee Won Hee has said Hyundai Motor will probably sell more than 4 million vehicles this year as they raise production in markets including China.

The gains will probably allow Hyundai Motor to post record earnings this year and exceed profit generated by Japan’s Toyota Motor Corp., according to analyst estimates.

Hyundai Motor’s shares have tripled since the end of September 2008, when the most recent strike ended, compared with a 28 percent jump in the benchmark Kospi index. Toyota, Japan’s largest automaker, dropped 43 percent in the same period, as it grappled with record recalls and output disruptions following the record earthquake and tsunami this year in the country’s northeast.

Moon started working at Hyundai in 1986 and joined the union in 1988. He said he was arrested four times while participating in union-staged strikes and was laid off three times by the company.

Higher Wages

He won the election with a 51.5 percent vote to Lee’s 48.1 percent by promising higher wages and incentives, shorter working hours, enhanced medical coverage and job tenures until age 60.

The latest wage accord, negotiated by Lee and ratified by union workers on Aug. 27, expires in a year. The agreement included a 5.4 percent rise in base salary and an annual bonus equal to three months’ pay, in addition to 7 million won ($6,150) in cash and 35 shares for each worker.

The most recent strike in 2008 cost Hyundai at least 691 billion won or production of 44,645 vehicles, during the 12-day stoppage, according to the company.

“We are willing to yield and negotiate but we will not be forced to just sacrifice,” Moon said. “If they won’t talk to us, we will make them talk.”

--Editors: Dave McCombs, Chua Kong Ho

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net