Hyundai Motor’s Asan plant faces setback as Transys strike prolongs

On the 6th, representatives from Hyundai Transys partner companies held a rally in Seosan, Chungnam, urging an end to the Hyundai Transys labor union strike. (Hyundai Transys Partners Association)

Hyundai Motor Co. is facing a production setback as the strike by its sister company Hyundai Transys Co., an auto parts manufacturer, continues.

According to industry sources on Thursday, Hyundai Motor’s Asan assembly plant, which manufactures models such as the Sonata and Grandeur sedans, saw some of its conveyor belt operate empty, slowing the assembly line. Such operation will run until next Wednesday.

The Asan plant cited a shortage of transmissions as the reason for slowed operations, adding that the plan could change based on transmission supply and strike conditions at affiliates.

The plant is responsible for assembling parts produced by various lines.

Although the operation plan did not specify exact models affected by reduced production, extended disruptions are expected to incur significant financial losses as the plant produces popular models such as the Sonata and Grandeur.

The strike at Hyundai Transys, which produces transmissions, a key component of internal combustion engines, has created production disruptions at the automotive group’s assembly plants.

Hyundai Motor’s Ulsan Plant 1 has already suspended operations on some lines, including Line 1, while Kia Corp.’s Gwangju Plants 1 and 2 have initiated partial gap pitch operations.

Hyundai Transys’s subsidiary Tranix Corp. which assembles transmissions, has completely shut down its Jigok plant.

On Wednesday, around 800 suppliers for Hyundai Transys held a rally in Seosan, South Chungcheong Province, calling for an end to the strike.

They warned that the strike at Hyundai Transys’ Jigok plant has led to losses of 140,000 units, impacting the deliveries of small- and medium-sized suppliers, with some facing potential closures.

Industry insiders believe that the strike is the result of Hyundai Motor‘s rapid increase in performance bonuses over the past few years.

Hyundai Motor is typically the first in the group to conduct collective wage negotiations, followed by its affiliates, which often benchmark Hyundai Motor’s outcomes.

Hyundai Motor has increased the scale of its performance bonuses as its performance has improved in recent years.

It paid 200 percent of performance bonus and a one-time payment of 5.8 million won ($4,194) in 2021, 300 percent and 5.5 million won in 2022, and 400 percent and 10.5 million won last year, and 500 percent plus 18 million won this year.

Since 2022, the company has also offered additional special performance bonuses, which have been incorporated into regular bonuses this year, resulting in a significant increase in regular performance bonuses and lump sum payments.

However, affiliates such as Hyundai Transys, Hyundai Wia Corp., and Hyundai Rotem Co. have less operating profit compared to Hyundai Motor and Kia.

In 2022, Hyundai Transys’ operating profit was 117 billion won, with an operating margin of only 1 percent. Hyundai Wia’s margin was 2.6 percent.

In a related development, the Korean Metal Workers’ Union issued a statement on Tuesday that “the operating margin of complete vehicles is close to 10 percent, with most of the excess profit concentrated in finished car companies.”