Hyundai Motor Group has placed its supervisory employees’ wages into stasis in an effort to minimize costs and better cope with the financial hardship it expects to face in 2017.
Roughly 35,000 staff managers are affected by the wage freeze — the majority being employees at Hyundai and Kia Motors.
While talk of the salary freeze had circulated for weeks, a company spokesman updated WardsAuto on the situation today. As for his feelings on the subject as one of the affected managers?
“I don’t mind at all,” he said. “My company being stable is a lot more important than getting a little more money.”
The news was broken to affected employees via an official letter that states, “The company is already taking emergency measures to overcome many difficulties, such as an economic downturn, slowing sales and a drop in operating profit, while company executives have voluntarily cut their own wages by 10%.”
Typically, supervisory staff members at Hyundai and Kia receive an annual raise when unionized workers and management sign a new pay agreement. The wage freeze effectively keeps that from happening.
Hyundai and Kia both struggled throughout 2016. Hurt by waning interest in small cars, each of the companies fell short on last year’s sales goals. They’ve also been subject to frequent partial strikes and temporary stoppages caused by unhappy labor unions.
Hyundai and Kia last froze wages in 1998, when the Korea was in the midst of a financial crisis so bad that General Motors managed to scoop up a bankrupt Daewoo for only $1.2 billion. In hindsight, many would have preferred that GM sat out that yard sale.
[Image: Hyundai]
“In hindsight, many would have preferred that GM sat out that yard sale.”
Like who?
Ford, for starters. GM’s current revival would have been a lot tougher without the Cruze and the Encore – both direct results of the Daewoo purchase.
Daewoo gave us the Cruze.
Their prior products before GM were a mashup of old Mazda and Mitsubishi junk anyway.
I believe the Encore is on a Daewoo-designed platform as well, Corey. It’s definitely built in Korea.
I believe you’re right RE: Trax platform. I think they’re doing fine work in SK currently – the things that come out of there are at least decent, and sell well even if I personally dislike them (Encore).
Yeah it seems that much of GMs car engineering is currently being done in Korea and Germany.
Suzuki
This is a refreshing contrast to Detroit’s tendency to pay their execs and managers top dollar even as the companies they ran lost money and market share.
Except that it will (or should) lead to lots of attrition and turnover, which will hurt the company even more. I have a real problem with getting wages cut for not meeting op income increase targets. When the company is losing money, yes. When they’re just not making enough money, no. I voted with my feet recently in that exact circumstance, my division of HugeCo was “signed up for” ~$900M of profits in a bad economy (oil/gas business); they were on track to make maybe $750M of profits. Response was to cut our pay 10%. Attrition was breathtaking. Good luck making those profits with no workforce, idiots.
@S2k Chris: Agreed. The team spirit displayed by the quoted manager will quickly wane if these measures *don’t* work.
My last company froze wages for a year, but I left 2 months into that because the business was foundering anyway. The remaining dreamers are still waiting for pay hikes that will never come. It’s a movie I had seen before.
I doubt the frozen “wages” include bonuses, stock options, free cars, etc.
Lots of benefits fall under a different umbrella than wages, and can be continued accordingly.
“Hurt by waning interest in small cars, each of the companies fell short on last year’s sales goals.”
For 2020, they’ll be developing the Hyundai Palatial Cruiser.
Freeze their wages until the Santa Cruz gets the green light!
Maybe the unrest among their labor unions will spell the demise of their automotive divisions. I remember when their shipping arm did a financial face plant.
In both cases, labor unrest and strikes hurt them badly, and if chip makers face a similar slow down in the near future, we might see their electronics division face similar hardships.
Unless the South Koreans can get their political act together, there will be much unrest in their economy and a chance for North Korea to cause much insecurity.
Could be a test by North Korea of the new Trump administration.
Hyundai may be really big, but not too big to fail. It’s not GM.
Who can forget the Daewoo Pontiac LeMans. Talk about a fall/fail.
IIRC that car was an exact copy of the late 80’s Opel Kadett… it was not an original Korean design.
There’s nothing like the feeling of a car built by “motivated” employees. In this case, that might not be a good thing.
Doubt the Chung family has tightened their collective belts.
2016 was a weird year for H/K – saw significant growth in certain markers – EU, Australia, India, China, Mexico and saw stagnant sales (US) or declining sales in others (Russia, Brazil) due to economies being in turmoil.
Biggest misstep was not expanding the production capacity of the crossovers currently in their lineup, followed by not expanding their crossover offerings (much less a pick-up; the Santa Cruz should have been greenlit already).
But H/K are heavily investing in crossovers (as well as hybrids/PHEV/EVs) – we’ll see if that investment pays off (thus far, seems like the Kia Niro is paying off in certain markets like the EU).