Hyundai Motor Company’s Ulsan Plant 1, a key facility for the world’s third-largest automaker, has halted production due to a month-long strike at Hyundai Transys, a major parts supplier. Hyundai Transys manufactures transmissions and other essential components for Hyundai Motor and Kia. Last year, the company recorded 11.7 trillion won ($8.5 billion) in sales and 117 billion won in operating profit, with an average salary per worker at 170 million won.
The labor union at Hyundai Transys initiated the strike a month ago, demanding a performance bonus amounting to 2% of last year’s sales, or approximately 230 billion won, double the company’s operating profit last year. This marks the first time in six years that Hyundai’s Ulsan plant came to a standstill due to a strike.
Hyundai announced that Plant 1 will halt production starting on Nov. 5. Line 1, which produces the compact SUV Kona, will shut down from Nov. 5 to 8. Line 2, where the electric vehicle Ioniq 5 is manufactured, will remain closed until Nov. 18. The shutdown has added woes to Hyundai, which has been struggling with a temporary downturn in demand for EVs.
“The complete shutdown of Plant 1 is the result of halted parts supply affecting Line 1, and reduced demand for EVs impacting Line 2,” a Hyundai official explained.
Hyundai Transys produced roughly 4 million transmissions last year, accounting for 65% of South Korea’s passenger car transmission market and 49% of the accelerator market. The ongoing strike has disrupted around 150,000 units of transmission production.
The strike follows a prolonged labor negotiation that began in June. The union sought a substantial performance bonus after Hyundai Transys’ operating profit surpassed 100 billion won for the first time since the pandemic. However, the company, citing low operating margins, rejected the request.
The union demanded a 159,800-won increase in base salary (excluding regular raises) and 2% of last year’s sales, roughly 230 billion won, as a performance bonus. When the company dismissed these demands, the union staged a walkout last month at Hyundai Transys’ largest factory, the Jigok plant in Seosan, South Chungcheong Province.
Hyundai Transys’ operating profit margin was just 1% last year, significantly lower than other Hyundai Motor Group affiliates such as Hyundai Mobis (3.9%) and Hyundai Wia (2.6%). Given that only 1 won is earned from every 100 won in sales, the company would have to incur additional debt to meet the union’s performance pay demands. The union argues that Hyundai Transys’ profitability has been compromised because Hyundai Motor Group set low unit prices to bolster its overall automotive performance.
Recently, union members have staged sit-in protests, including demonstrations near Hyundai Motor Group Chairman Chung Eui-sun’s residence in Seoul and a large-scale rally in front of Hyundai’s headquarters that partially blocked traffic.
