Hyundai Motor Co. and its labor union reached a tentative agreement Thursday toeliminate night shifts and increase wages, moving one step closer to end thecompany's first strike in four years.
The preliminary agreement means that workers will halt limited strikes theyhave been staging since July, which have resulted in 1.59 trillion won ($1.4billion) of lost output for South Korea's largest carmaker, the company said.
Hyundai and union officials wrapped up their four-month negotiations and agreedto scrap night shifts starting March 2013. Hyundai will invest 300 billion won,or $264 million, in facilities to help it maintain the current level of outputdespite reduced working hours.
The deal will be put to a vote by Hyundai's more than 40,000 unionized workerson Sept. 3.
Kwon Oh-il, an official at Hyundai's labor union, said it was uncertain whetherthe workers would approve the terms.
"In previous years, there were cases when the tentative deal had failed towin majority votes," Kwon said by phone.
Since July, Hyundai's labor union staged a series of brief walkouts to putpressure on management during negotiations. Workers at Kia Motors Co. andGeneral Motors Co. in Korea also have staged limited strikes to press demandsfor an end to night shifts and new wage terms.
Earlier this month, unionized workers at GM's Korea unit rejected a tentativedeal reached between management and the union's board. The union staged apartial strike Wednesday that the company said caused a loss in production of15,000 vehicles.
The strike is expected to make a dent on Hyundai's bottom line for the currentquarter. However, the company will likely meet its sales target this yearbecause it exceeded its production target in the first six months of the year,which could make up for the lost output, analysts said.
"The strike is unlikely to have much impact on its annual earnings, thoughit will affect its quarterly financial results," said Suh Sung-moon atKorea Investment & Securities.