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Hyundai advised to axe workers

Oct 08,2019
An advisory committee warned Hyundai Motor that it must cut its workforce by up to 40 percent in the next six years to survive.

A member of the committee said Sunday that the company will collapse unless its union agrees to cut the workforce by 20 to 40 percent by 2025. With the global auto industry shifting focus to electric and hydrogen fuel-cell vehicles rather than diesel and gasoline-powered cars and increasing automation in the manufacturing process, manpower restructuring has become inevitable, according to the member of the committee, which consists of consultants and outside experts.

While Hyundai Motor’s management and labor union have sparred for decades, things started to change in August 2018, when a committee dedicated to employment stability was set up. The committee brought management and labor together to agree to changes necessary to shift to producing eco-friendly cars.

According to the advisory committee, management and the union have recently reached a consensus on cutting the production workforce by some 20 percent by 2025.

“They have not set an exact layoff target, but it is meaningful that the labor union accepted the need to downsize the workforce,” an adviser from the committee said.

Considering there are some 50,000 production workers at Hyundai Motor, the agreement means they will let go of roughly 10,000 workers by 2025.

It wasn’t easy for the two parties to come this far. After the committee on employment was formed, the union argued the company should hire more people as 13,500 workers are due to retire by 2025. Management said there will be no new hires because the industry is quickly shifting to electric and hydrogen fuel-cell cars.

As electric and hydrogen fuel-cell cars do not need transmissions and have fewer parts than diesel or gasoline-powered cars, a smaller workforce is needed.

As discussions went on, the union accepted the inevitability of restructuring the workforce.

It was a risk for the union to stonewall as going electric is a global trend. If it refused changes now, the company could end up losing more jobs in the future by losing business competitiveness.

However, there are still differences in opinion to be resolved. From the union’s point of view, a 20 percent cut is the maximum it can accept, while management considers it a minimum.

By 2025, Hyundai Motor plans to produce 450,000 eco-friendly cars per year including electric and hydrogen fuel-cell cars. That target is likely to rise in coming years, as it is becoming increasingly difficult to sell traditional diesel and gasoline cars in overseas markets.

According to industry sources, the automaker is planning on installing a production line dedicated to electric car production by 2021 and is considering setting up another dedicated production line by 2025 depending on demand.

BY KIM HYO-SEONG, KIM JEE-HEE [kim.jeehee@joongang.co.kr]