The global automotive industry has entered a fierce survival competition. With a slowdown in electric vehicle market growth, U.S. tariff policies, aggressive pricing from Chinese manufacturers, rising raw material costs, and geopolitical risks, the industry faces significant challenges. Automakers are under pressure to maintain profitability while continuing to invest in future vehicles.
Global companies have already tightened their belts. Germany's Volkswagen is implementing large-scale cost-cutting measures and organizational restructuring in response to poor performance and declining electric vehicle demand. Japan is no different; Nissan is reducing global production capacity due to weak sales and is pursuing workforce reductions and factory consolidations affecting tens of thousands. Honda is also adjusting its electric vehicle investment plans, shifting towards a profitability-focused management approach. Even companies that once dominated the global market are enduring painful restructuring to survive.
In contrast, the domestic automotive industry is experiencing a different scenario. The Hyundai Motor and GM Korea unions began partial strikes and other labor actions on July 13. As production disruptions become a reality, concerns within the industry are growing. While the right to collective action is constitutionally guaranteed, both labor and management must seriously consider the repercussions of halting production lines during a time of intense global competition.
The Hyundai union is facing criticism for its demands, which include a 30% performance bonus based on net profit, extending retirement age, and reinstating members dismissed for illegal activities. Particularly concerning is the demand for a fixed percentage of net profit as a performance bonus, which could significantly limit the company's future investment capacity. Hyundai's operating conditions are also challenging, with U.S. tariff burdens, currency fluctuations, rising raw material costs, and instability in the Middle East contributing to declining profitability. The company's operating profit in the first quarter fell by more than 30% compared to the same period last year.
The impact of halted production extends beyond automakers. The automotive industry is a representative manufacturing ecosystem closely linked with thousands of suppliers, as well as the steel, chemical, electronics, and logistics sectors. If assembly plants stop operating, the production of suppliers will also be affected, disrupting export schedules and international supply chains. It takes a long time to restore trust in the supply chain once it has been shaken.
As the global automotive industry grapples with survival, South Korea cannot remain stuck in outdated labor-management paradigms. Automakers in the U.S., Germany, Japan, and China are enduring the pain of reducing factories and workforce while continuing to invest in future technologies. It is crucial to reflect on the self-destructive cycle of strikes and production disruptions that erode competitiveness.
The government should respect labor-management autonomy but must actively mediate to prevent prolonged stalemates in negotiations. It is also essential to support expanded capital investment and research and development, as well as policies that enhance supply chain competitiveness. Companies, in turn, must strive to create a safe working environment and offer reasonable compensation.
The automotive sector, alongside semiconductors, is a key industry responsible for hundreds of thousands of jobs and exports. Prolonged labor disputes will harm the entire national economy. To ensure that the South Korean automotive industry does not fall behind in the survival competition, it must prioritize collaboration over divisive confrontations. What is needed now is not a power struggle but a shared solution for the future.
* This article has been translated by AI.
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