Hyundai Motor, Kia Decline after unions plan partial strikes
By Bloomberg
Hyundai Motor Co., South Korea's largest carmaker, and affiliate Kia Motors Corp. fell after their workers' unions announced partial strikes.
Hyundai dropped 2 percent to close at 191,500 won in Seoul trading, to its lowest level since May 2013. Kia fell 2.6 percent, compared with a 0.5 percent decline in the benchmark Kospi index.
Workers at Hyundai will go on partial strike today through Sept. 26, and wage talks with the company are indefinitely postponed, union spokesman Hwang Ki Tae said yesterday. Kia's labor union is also putting down tools tomorrow and Sept. 26, according to its website.
"The unions' announcements triggered concerns that the strikes at Hyundai and Kia may take longer than expected," said Kwon Soon Woo, an analyst at HI Investment & Securities Co. "This will lead to an increase in lost production which may hurt the companies' third quarter earnings."
The strikes come after a group comprising Hyundai, Kia and affiliate Hyundai Mobis Co. last week paid 10.6 trillion won ($10 billion) for real estate in Seoul's Gangnam district last week, triple the property's assessed value. Prior to the purchase, Hyundai union spokesman Hwang had said negotiations on wages would be concluded "soon."
The purchase is proof of "problems with Chairman Chung Mong Koo's imperial management," the Hyundai and Kia unions said in statements calling for a cancellation of the deal.
"The companies have proven that they have an abundance of cash through this deal" and the money should be spent on the workers, the unions said in the statements.
Bonuses are at the center of this year's annual wage negotiations after the country's Supreme Court ruled in December that periodic bonuses and other compensation must be included in workers' base pay. Both companies have been sued in court by their unions over the issue, with verdicts still pending.