Talks with Labor Union Fail to Reach an Accord
Hyundai Motor Co. was surprised by the unexpectedly high popularity of the IONIQ 5, the first electric vehicle (EV) rolled out from its dedicated EV platform E-GMP. Pre-orders for the new model amounted to 23,760 units on the first day alone, close to the company’s annual sales goal of 26,500 units.
Yet the huge popularity of the EV model has caused problems for the automaker. It started negotiations with the labor union over man-hours to mass-produce the IONIQ 5 but has failed to reach an agreement until March 7.
Electric cars without engines usually require fewer parts, 30 percent to 50 percent fewer than internal combustion-based cars. This means fewer workers are needed for electric car production. If an automaker changes its internal combustion vehicle production facilities to those for electric vehicles, the number of workers will be further cut.
Labor-management conflicts over job security at automakers began in earnest in 2020. The labor unions of Hyundai Motor Co. and Kia Corp. demanded the establishment of EV-only factories in Korea and a ban on EV parts outsourcing during their wage and collective bargaining negotiations last year. Industry analysts expect that labor unions’ demand for job security will intensify amid a worldwide transition to eco-friendly cars. On March 3, the Hyundai, Kia, and GM Korea labor unions visited the National Assembly to call for an extension of the retirement age to 65.
Parts supply is also a hot issue. Batteries are currently supplied from the outside. Even if Hyundai Motor's labor and management agree to ramp up electric vehicle production, it is not certain whether the carmaker will be able to scale up production.