Kia hit by union protests, stops work in domestic plants

Kia Motors is experiencing losses of hundreds of millions of dollars from a suspension of Saturday production shifts at its domestic plants, as the South Korean car-maker fights to avoid a fruitless pay negotiations with its union.

Production was interrupted in March at two of Kia’s three domestic assembly plants, and at all those of its larger affiliate Hyundai Motor, amid union protests over a new shift structure. Weekend shifts began again in May at Hyundai and in June at Kia after management concessions.

Cases in which people are leaving the company resumed at Kia this time at all three factories at the beginning of July, the company told the Financial Times on Thursday. Kia had not publicly announced the renewed disruption.

The confirmation of this unusually long-running industrial action comes as the car-maker prepares to enter talks with its union on Friday to decide further industrial action.

Unions at both Hyundai and Kia last week voted in favor of strike action after annual wage negotiations failed to produce an agreement. Workers at Hyundai’s South Korean factories cease working for two hours on both Tuesday and Wednesday, resulting in production losses of 4,185 vehicles worth 85.6 billion won ($76 million).

Analysts said the Saturday walkouts not recognized as a strike by Kia officials, were likely to have a significant impact on production, though admitted the effect was difficult to quantify.

Shin Chung-kwan, an analyst at KB Investment & Securities, estimated the loss of the Saturday shifts would result in lost output of up to 240 billion won each month. Hyundai reported a total of 1.7 trillion won in lost production after its two-month weekend stoppage earlier this year.

Both companies’ operations in South Korea have faced strikes annually in recent years, with the exception of a three-year period between 2009 and 2011, even though analysts say their factory workers are among the best paid in the global industry.

While both have responded by expanding overseas production, Kia’s South Korean plants still accounted for 57% of its output in the first half of this year, compared with 39% at Hyundai.