Hyundai Realizes Change Is a Must

Hyundai Motor Company (HMC) celebrates its fortieth anniversary this year, but its outlook is far from cheerful. The rapid fall of the dollar against the won is a direct blow to the company’s profitability, and its chronic malady of labor disputes has sprung up once again.

HMC’s business opening ceremony for 2007 was held on January 3, a day when the executives and staff gather to renew their commitment to unite in face of the many challenges expected in the New Year. However, the labor union demanded higher year-end incentives, smashing up company facilities and even assaulting the president.

The welcoming ceremony for new employees held the next day was held in a solemn mood as if the recruits were beginning military service and not their jobs.

Park Jung-in, senior vice-president of HMC, spoke of troubles rather than hope in his speech. Citing GM and Ford as examples of automakers on the decline as a result of excessive demands of the union and the negligent management, he urged the new staff to take their cases as lessons. Grim determination could be detected from his voice.

The sales promotion ceremony presenting awards to high-performing sales branch heads, held on January 5, was also far from a festive occasion.

“The union is making unreasonable demands by threatening to go on strikes, without the least bit of consideration for the company which is now facing a crisis,” Hyundai Motor vice-chairman Kim Dong-jin spoke with passion for more than forty minutes, a spontaneous part of his speech. “How can members of one family do this to each other?”

He also announced plans for an emergency management, projecting the exchange rate to fall to 880 won to the dollar. “We will on no account give in to the union this time,” resolved vice-chairman Kim in an interview after the ceremony.

The problems with HMC’s labor union are nothing new, but not a small part of the blame lies also with the executives for having allowed the trouble to fester to this degree.

Until now, Hyundai Motor’s management has lacked a firm principle on labor disputes, making do with stopgap measures whenever a new case of illegal strike or conflict broke out. It is also coming under fire for having failed to properly oversee the work attendance records of the union’s leadership and 500 or so representatives, and thus allowing them to grow into an “unchecked power.”

The troubled HMC union, often called Korea’s most “aristocratic labor union,” must be brought back on the right path. Unless the currently distorted union culture is corrected, not just the company and its workers but also the entire national economy will suffer for a long time to come. Hyundai Motor union stands now at crossroads, having to decide whether it will embrace the initial pain for lasting gain, or otherwise go down a path of certain and irrevocable downfall.