After Samsung, is Hyundai next? Strike threat looms over Chennai plant

Mint

10 hours ago

Mumbai: South Korean automotive giant Hyundai Motor's India unit faces a potential worker strike at its plant near Chennai from a union backed by the Communist Party of India (Marxist) or the CPI(M), if the outcome of ongoing triennial wage negotiations is not to the union's satisfaction. The same union had earlier halted operations at the nearby manufacturing facility of another Korean giant, Samsung.
Hyundai had received a temporary stay from the Madras High Court in March against any disruptions from workers, as per the company's writ petition, a copy of which Mint has seen, but that could change depending on the outcome of the wage negotiations.
The Hyundai Motor India Employees Union (HMIEU), which is backed by the CPI(M)-affiliated CITU (Centre of Indian Trade Unions), has called for a secret ballot to establish itself as the majority union of Hyundai's factory workers in India, according to CITU's state president A. Soundararajan. The association also wants the company to engage with it for the wage negotiations.
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'The union is asking the management to recognize them as the majority union as now they have 2,000 workers associated under them," said Soundararajan. 'This can be done using a secret paper ballot."
The current majority union for Hyundai's two integrated manufacturing facilities near Chennai is the United Union of Hyundai Employees (UUHE), which is not affiliated to any political party.
UUHE has disputed HMIEU's claims that it holds majority affiliations from workers. 'We have 2,000 members and have all required documents to prove the membership. The negotiations with the management are ongoing," UUHE's president Ramanathan said.
In India, a union that secures affiliation from 51% or more workers' is entitled to be recognized as the majority union by the employer.
HMIEU is awaiting the conclusion of Hyundai's ongoing negotiations with UUHE before deciding its further course of action, which can include a strike, CITU's Soundararajan said.
Hyundai negotiates three-year wage agreements with its workers in India. The last agreement was reached in May 2022. 'When the last settlement was done, the union (HMIEU) was not in majority, but now they are," Soundararajan said.
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In an emailed statement to Mint on Thursday, Hyundai referred to HMIEU as an unrecognized minority union and said that 'in lieu of the ongoing litigation before the Court, HMIL cannot comment on any matters which are sub-judice".
'As a responsible and ethical corporate entity and an employee friendly company, Hyundai Motor India Ltd continues to maintain a harmonious and inclusive work environment while adhering to all applicable Indian laws and internal protocols," the company said in its statement to Mint.
On the wage negotiations, the company said in its statement that long-term settlements are a standard industry-wide practice involving multiple rounds of discussions and negotiations.
'We are currently engaged in ongoing discussions with union representatives of UUHE, which is the recognized majority union at Hyundai Motor India Limited and as per the Labour Department of Government of Tamil Nadu," the company said. 'We remain focused on reaching a mutually beneficial outcome. HMIL leads the industry in offering among the best-in-class wages and benefits, and prioritizes employee well-being and operational continuity as part of its long-standing commitment to India and the automotive industry."
Expert views
Legal experts said while the company is currently protected against any worker strike due to the Madras High Court's orders, once the ongoing trade negotiations conclude, HMIEU will have legal recourse to address its grievances, if any.
'The injunction granted by the Madras High Court to Hyundai in March temporarily restrains the union from initiating strike action," said Rohitaashv Sinha, partner at law firm King Stubb & Kasiva, Advocates and Attorneys. 'However, such an injunction does not grant the company indefinite or absolute protection from future strikes."
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If it is unhappy with the outcome of the wage negotiations, HMIEU can move the state's labour department to either challenge the wage settlement or seek voting by secret ballot to establish itself as the majority union, said Kinjal Champaneria, partner at law firm Solomon & Co.
Shades of Samsung
Hyundai is the second South Korean chaebol after Samsung to face worker displeasure in Tamil Nadu. Samsung India Workers' Union (SIWU), a worker union affiliated to CITU, had in September last year and again in March this year called strikes at the company's plant near Chennai. The union wanted to be recognized as the majority union, a theme repeating itself at Hyundai's manufacturing facility just half an hour's drive away.
In fact, HMIEU had called for a strike to show solidarity with Samsung's workers in March, prompting Hyundai to move the Madras High Court for an injunction. Moreover, the union had also threatened to hold an indefinite strike from 5 April onwards to ask management to listen to its demands of recognising the union as the majority union.
Likely impact of a strike
A workers' strike at this juncture could hit Hyundai hard as the Irungattukottai plant with about 820,000-units annual capacity not only makes cars for India but for exports as well. The company shipped more than 160,000 cars overseas from this plant in FY25.
The company has long been the second-largest seller of cars in India behind Maruti Suzuki. However, it has lost market share to domestic rivals Tata Motors and Mahindra & Mahindra in recent years. In fact, the two carmakers overtook Hyundai in sales last month, relegating it to the fourth position for the first time in more than a decade.
While monthly sales in India's car market can be dynamic and Hyundai is likely to regain a podium place, the narrowing gap with peers in terms of sales volumes has got the company's headquarters at Seoul worried.
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Hyundai has a second manufacturing unit near Pune in Maharashtra, which it acquired from General Motors. The plant is undergoing renovation and is expected to be operational later this year with an annual capacity of 170,000 cars.
The company's shares closed 1.16% lower on the BSE at ₹1,907.05 on Thursday. The stock has failed to sustain above its issue price of ₹1,960 since making its public markets debut last October amid stagnant sales and shrinking market share.