Hyundai Motor, union to meet on Daimler venture

SEOUL, Aug 6 Samuel Len writing for Reuters reported that South Korea's largest carmaker Hyundai Motor Co said on Tuesday it planned to meet labour leaders over union demands that risk scuppering a multi-million dollar venture with DaimlerChrysler AG.

Under the planned deal, Hyundai and DaimlerChrysler, the world's number five automaker, would hold 50 percent stakes each in a commercial vehicle plant in Chonju, South Korea, and operate it as a joint venture.

The venture would help Hyundai forge deeper links with the U.S.-German firm, which now owns a 10-percent stake in Hyundai.

Hyundai's union, which staged partial strikes before reaching a wage settlement in June, had asked the automaker to guarantee jobs at the proposed venture for 10 years, a Hyundai Motor spokesman told Reuters.

He said talks were expected to start in the days ahead and he could not give any timetable.

Union officials said they wanted Hyundai to guarantee workers 10 years of salary and retirement pay in case the venture failed. The union also would have to have a say in the selection of workers to be transferred to the venture, they added.

Many South Korean companies are bound by collective bargaining contracts that require union approval of management decisions that affect jobs.

Hyundai shares closed up 0.96 percent at 31,700 won on Tuesday as a retreat in the Korean won was seen as good news for exporters. The broader stock market index ended down 0.29 percent.

Analysts expected Hyundai to reach a compromise with its union and said a delayed launch of the joint venture would not have an immediate impact on the automaker.

"Even if they do not start at the originally scheduled timing, it does not affect the company's earnings," said Suh Sung-moon, an auto analyst at ING Barings.

This was because passenger cars, not commercial vehicles, accounted for the bulk of Hyundai's earnings, he added.

But any strained ties with DaimlerChrysler could take some of the shine off Hyundai.

"One of Hyundai Motor's best investment points has been expanded ties with DaimlerChrysler," Suh said.

Hyundai broke away from the conglomerate of the same name to form an autos-focused group that includes Kia Motors (KSE:00270.KS - News). Together they are the largest non-Japanese import maker in the U.S. auto market.

Hyundai's ties to DaimlerChrysler include a joint venture formed last year to produce diesel engines.