South Korea : Job crunch spreads to automobile industry
Seoul, Nov 15: The workforce at first-tier suppliers to Hyundai Motor Group that owns South Korea’s No. 1 and 2 auto makers Hyundai Motor Co. and Kia Motors Corp. has been shrinking since last year as they fall as casualty case from troubles at their primary customer reeling from slowing vehicle sales across the world.
According to the report released by the Korea Institute for Industrial Economics and Trade (KIET) on Monday, the combined number of workers at Hyundai Motor’s 29 major suppliers with annual sales of less than 100 billion won ($85.3 million) was reduced to 6,034 at the end of last June from 6,290 in 2014 and 6,153 in 2015.
The latest finding suggests the automobile industry in downhill after peaking in mid-2000s.
Among the 29 suppliers, 16 companies shed jobs last year. Manufacturers that cut employees two years in a row numbered nine, doubling five whose workers increased during the period.
Some of them were large-size companies with assets over 12 billion won, suggesting how fragile the industry may be lower in the supply chain.
The job losses mainly owe to poorer performance of Hyundai Motor Group. The operating margin of the nation’s largest car maker Hyundai Motor slipped to 6.9 percent last year from over 10 percent in 2011 due to slowed shipments to emerging economies.
The company’s operating profit in the first half of this year fell 7.0 percent from a year ago.
Lengthy strikes at factory lines of Hyundai Motor and Kia Motor during the recent summer that disrupted production aggravated woes for their suppliers.