The Big Chill: Management Wages Frozen as Hyundai and Kia Ride Out Financial Storm

Matt Posky
by Matt Posky

Hyundai Motor Group has placed its supervisory employees’ wages into stasis in an effort to minimize costs and better cope with the financial hardship it expects to face in 2017.

Roughly 35,000 staff managers are affected by the wage freeze — the majority being employees at Hyundai and Kia Motors.

While talk of the salary freeze had circulated for weeks, a company spokesman updated WardsAuto on the situation today. As for his feelings on the subject as one of the affected managers?

“I don’t mind at all,” he said. “My company being stable is a lot more important than getting a little more money.”

The news was broken to affected employees via an official letter that states, “ The company is already taking emergency measures to overcome many difficulties, such as an economic downturn, slowing sales and a drop in operating profit, while company executives have voluntarily cut their own wages by 10%.”

Typically, supervisory staff members at Hyundai and Kia receive an annual raise when unionized workers and management sign a new pay agreement. The wage freeze effectively keeps that from happening.

Hyundai and Kia both struggled throughout 2016. Hurt by waning interest in small cars, each of the companies fell short on last year’s sales goals. They’ve also been subject to frequent partial strikes and temporary stoppages caused by unhappy labor unions.

Hyundai and Kia last froze wages in 1998, when the Korea was in the midst of a financial crisis so bad that General Motors managed to scoop up a bankrupt Daewoo for only $1.2 billion. In hindsight, many would have preferred that GM sat out that yard sale.

[Image: Hyundai]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Highdesertcat Highdesertcat on Jan 18, 2017

    Maybe the unrest among their labor unions will spell the demise of their automotive divisions. I remember when their shipping arm did a financial face plant. In both cases, labor unrest and strikes hurt them badly, and if chip makers face a similar slow down in the near future, we might see their electronics division face similar hardships. Unless the South Koreans can get their political act together, there will be much unrest in their economy and a chance for North Korea to cause much insecurity. Could be a test by North Korea of the new Trump administration. Hyundai may be really big, but not too big to fail. It's not GM.

  • Thornmark Thornmark on Jan 19, 2017

    Who can forget the Daewoo Pontiac LeMans. Talk about a fall/fail.

    • Sceptic Sceptic on Jan 19, 2017

      IIRC that car was an exact copy of the late 80's Opel Kadett... it was not an original Korean design.

  • Dantes_inferno Dantes_inferno on Jan 19, 2017

    There's nothing like the feeling of a car built by "motivated" employees. In this case, that might not be a good thing.

  • Bd2 Bd2 on Jan 22, 2017

    Doubt the Chung family has tightened their collective belts. 2016 was a weird year for H/K - saw significant growth in certain markers - EU, Australia, India, China, Mexico and saw stagnant sales (US) or declining sales in others (Russia, Brazil) due to economies being in turmoil. Biggest misstep was not expanding the production capacity of the crossovers currently in their lineup, followed by not expanding their crossover offerings (much less a pick-up; the Santa Cruz should have been greenlit already). But H/K are heavily investing in crossovers (as well as hybrids/PHEV/EVs) - we'll see if that investment pays off (thus far, seems like the Kia Niro is paying off in certain markets like the EU).