Hyundai Motor, union seal tentative wage deal

Thu Aug 30, 2012 1:20am EDT
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By Hyunjoo Jin

SEOUL (Reuters) - Hyundai Motor (005380.KS: Quote) on Thursday reached a tentative wage deal with its South Korean labor union leaders, ending the second-costliest strike in the firm's 45-year history.

If approved by members, the deal will allow the carmaker to avert further walkouts that have cut production and slowed its sales growth, and ease the risk of a re-emergence of workforce militancy.

In July and August the union staged a series of partial strikes over pay and conditions, its first in four years and an echo of the 1980s and 1990s, when industrial action was a more common feature of corporate Korea.

The walkouts stopped Hyundai making cars worth 1.59 trillion Korean won ($1.40 billion), production losses which will have a short-term impact on sales and earnings.

The firm will try to make up for the missing units with extra work later this year, analysts and company officials said, an expectation reflected in a largely unmoved share price.

"Hyundai's second-quarter sales and earnings will be smaller than expected because of the strike," said Lee Sang-hyun, an analyst at NH Investment & Securities in Seoul.

"Hyundai's August sales, which will be released on Monday, will suffer. Not only domestic sales but overseas sales will suffer because of reduced exports," he said.

As of Wednesday, the strikes left Hyundai 76,723 vehicles short, lost production which has directly affected sales because the firm keeps a low inventory.   Continued...

The logo of Hyundai Motor is seen on a car displayed at a Hyundai dealership in Seoul July 26, 2012. REUTERS/Kim Hong-Ji