Hyundai in for a rough summer?

Hyundai and Kia are riding high, but Reuters is suggesting that the potential for labor strife may rear its ugly head this month and possibly lead to work stoppages and production slowdowns:

Hyundai's labour union, South Korea's largest, wants a 7.2 percent increase on average in basic salary and a bonus payment equivalent to eight months pay. It also wants preferential treatment for children of its long-time employees when they seek employment by Hyundai.

Last year, Hyundai, which reported record profits, agreed on a wage deal that included a 4.87 percent rise in base salary, performance bonuses amounting to the equivalent of three months salary plus a 5 million won ($4,624) payment, as well as offering 30 Hyundai shares to each employee.

NON-WAGE COMPLICATIONS. Apart from the wage talks, this year's negotiations add a fresh twist. Under a new labour law, Hyundai and its union have been locking horns over cutting the number of full-time paid union organisers and altering a work shift system, the two most contentious issues for the auto industry as a whole.

President Lee's pro-business government implemented a law in July last year that requires employers to limit the number of full-time paid unionists and Hyundai is demanding the union cut the number of full-time unionists to 24, or just one-tenth of the current 235, a call flatly rejected by the union.

Its sister company Kia last year agreed with the union to pay wages to only 21 full-time unionists from the previous 234, putting pressure on Hyundai to agree to a similar deal.

When the unionists themselves see their livelihood threatened, who knows how bad things could get.

With a combined ten percent of US market share, Hyundai and Kia are doing very well right now due to a number of factors — boosts in quality and improvements in style, competitive pricing, greater and more positive brand recognition, and even Japanese automakers' own troubles getting vehicles to the marketplace since the Tohoku disaster earlier this spring — and it would be a shame to squander the strong position the two companies find themselves in.