I missed this Reuters piece when it came out back on the ninth, but happened across it this morning. It looks like Hyundai Motor Company is up against similar production problems faced by Japanese automakers with highly-inefficient domestic plants.
How inefficient you ask?
It takes twice as long on average – over 28 hours – for Hyundai Motor Co to make a car in South Korea than in the United States, even though its domestic plants have far more workers for each production line.
Add in high wages, frequent industrial action and outdated facilities, and Hyundai’s hourly labor costs per worker in South Korea, at 24,778 won ($22.26), are 16 percent higher than at its U.S. factories, and triple what they are in China.
As to making a move to shutter the plants, which account for 43 percent of world output, one Hyundai exec told Reuters:
“People ask us why we don’t just produce overseas, given all the labor troubles at home. But our home market is our root and the base for our growth overseas. And there’s a risk in building cars overseas,” said a Hyundai executive from the team that manages its labor relations.
Translated: “We don’t want a shitstorm here at home with a 46,000-strong union.”
A union which has seen their annual pay more than doubled over the past decade to an average of $88,600 – exceeding that of both Toyota and Samsung workers. This has helped make Ulsan the highest per-capita income city in Korea.
The article also notes that Hyundai introduced a new shift system that cut daily production hours to 17 from 20 –bringing about a 7 percent increase in cars produced per hour.