Not everyone is pleased about Hyundai Motor Co. going “Gangnam Style.” The South Korean automaker faces more labor unrest following the group’s decision to spend $10 billion for a plot of land in Seoul’s most fashionable Gangnam district.
The unions staged a partial strike at Hyundai Motor factories last week and announced plans to continue to walkouts again this week to show their displeasure with the recent decision to spend money on a record-breaking bid for what is described as an expensive trophy property while demanding wage restraint from the workers in its automotive factories.
The Hyundai-led group – which includes sister firms Kia Motors Co and Hyundai Mobis Co – made the record bid for the land earlier this month. Hyundai’s bid for the property was more than triple the property’s appraised amount as it outbid Samsung, the South Korean electronics giant.
Hyundai has defended the bid by saying a new headquarters building will help the company improve its efficiency. Under Hyundai’s plan, the site would contain the company headquarters, a hotel and car theme park complex, according to Reuters.
While other automakers have been relocating to swankier locations in recent days – Fiat Chrysler in a tony part of London and Cadillac to SoHo in New York City – Hyundai’s move has met with the greatest resistance.
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Unions representing Hyundai workers aren’t the only ones expressing displeasure for the deal. Hyundai’s shares have also lost approximately $11 billion in value since the bid was announced and analysts have been outspoken in the criticism of the deal.
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Hyundai, which is one of the world’s largest automakers, appears to have ample cash reserves, but its margins have been declining in the face of intense competition in overseas markets in North America and China.
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In addition, the continuing labor strife in South Korea could undermine efforts by both Hyundai and Kia to post record sales in the U.S. Both Hyundai and Kia have assembly plants in the U.S. but both the Hyundai factory in Montgomery, Alabama and the Kia plant in West Point, Ga. are operating at maximum capacity, leaving both companies vulnerable to work stoppages in South Korea, which are the source for a substantial portion of the vehicles they sell in the U.S.