Hyundai was instrumental in setting up a car manufacturing plant in southwest Korea so that it could produce cars cheaply and, crucially, without unions.
The new car plant, opening in late 2021, is operated by Gwangju Global Motors (GGM), a newly established company founded by the city of Gwangju, which has a majority share of 21 per cent, while Hyundai has a 19 per cent stake. Hyundai was critical to launching GGM in terms of technology. It helped design the plant’s facilities and dispatched staff members to train the new recruits.
The aim was to outsource manufacturing so that workers are not directly employed by Hyundai. Companies other than Hyundai can contract GGM’s services. But Hyundai was primarily attempting to avoid unionised labour.
Most of the workers at Hyundai itself are unionised and have successfully taken industrial action to achieve higher wages. Average annual pay at Hyundai is 88 million won, slightly lower than Toyota Motors. The average annual pay at GGM, established without a union, is less than half that: 35 million won. Gwangju and the government will provide housing and benefits to help workers maintain their quality of life, but their pay is still below the national average of 42.34 million won for company employees.
Hyundai passes on its labour costs to consumers and felt it was not competitive in the small-car market. At the new plant, dubbed the «half-wage factory», it has launched a model sold exclusively online, produced using much lower labour costs and sold at lower prices. The aim is reportedly for future production to become increasingly outsourced.
