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Hyundai Motor¡¯s union members wrought havoc at a company ceremony on Jan. 3. The company president received a facial wound after unionized workers pushed him, while other members sprayed fire extinguishers, covering the hall with a misty cloud. The solemn New Year ceremony had to come to an abrupt end.
The reason the union caused such a commotion on the first work day of the year was because they felt their year-end performance bonus was not enough. At the end of last year, Hyundai Motor gave its workers a bonus equivalent to 100 percent of their average pay. That¡¯s because last year¡¯s production volume of 1.62 million vehicles was 98.3 percent of their goal. If they had met their production target, they would have received a 150 percent bonus. Union and management representatives agreed upon the condition during last year¡¯s pay negotiations.
But the union demanded the company pay them a 150 percent bonus, regardless of the performance. Taking into account lost output due to protracted labor strikes last year, Hyundai Motor had lowered its original output target of 1.78 million vehicles by 120,000. The reason unionized workers were unable to meet even the reduced output target was because, in addition to strikes over wages, they had downed tools 12 more times to take part in a broader strike by the umbrella labor group, Korean Confederation of Trade Unions.
It wouldn¡¯t have been so bad if there were no problems with the company¡¯s business conditions. But due to the continued appreciation of Korean won last year, Hyundai¡¯s 1.6 liter vehicles ended up becoming more expensive in the key U.S. market than models made by Toyota. In other words, Hyundai cars lost their price competitiveness in one of the company's top export markets. Hyundai¡¯s U.S. market share fell from 3 to 2.4 percent. But those unionized workers ignored such dire conditions.
Such blind unions are to drag their companies to the grave. That¡¯s what happened in the United Kingdom, which had been the world¡¯s top automobile exporting nation until the 1950s. Companies that manufactured world-renowned automobiles, like the Austin-Healey, Jaguar, Rolls Royce and Land Rover, were all sold off to foreign companies. What caused that was the ¡®British disease¡¯ or endemic labor strife, which made those companies less competitive. The main reason Japan¡¯s Nissan was sold off to France¡¯s Renault, while GM, Ford and Italy¡¯s Fiat face uncertain futures is due to greedy unions that ended up biting the hand that fed them. These actions by the union bode ill for the future. One day, the union may drive tens of thousands of workers, their families and hundreds of thousands of workers of their subcontractors out into the streets.
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