4/15/2019

Labor Contracts Force Local Output for Hyundai-Kia

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Hyundai Motor Co. and its Kia Motors affiliate are required by their labor contracts to maintain high local production in South Korea regardless of market or trade pressures to add capacity elsewhere.

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Hyundai Motor Co. and its Kia Motors affiliate are required by their labor contracts to maintain high local production in South Korea regardless of market or trade pressures to add capacity elsewhere.

Hyundai’s current labor pact demands that the company make at least 1.6 million vehicles per year in Korea, The Korea Herald reports. The agreement requires the approval of local workers before Hyundai opens a factory anywhere overseas.

The contract also forbids Hyundai from laying off workers in Korea because of a business downturn or shift in market demand until after the company makes cuts overseas, according to the newspaper.

Last week Kia’s labor union demanded the company move production its new Telluride SUV from the U.S. to Korea and do the same for its new SP2 small crossover vehicle, which is scheduled to launch in September as the company’s first locally produced model in India.