SEOUL (Bloomberg) -- For Hyundai Motor Co., Moon Yong Moon's labor protests during the 1990s became such a nuisance that South Korea's largest carmaker laid him off three times. The strategy didn't work.
Moon, 46, leader of Hyundai Motor's labor union, is threatening the automaker with its first strike since 2008 unless the Seoul-based company increases wages and reduces working hours.
On Wednesday, more than 70 percent of the 45,000- member guild voted in favor of empowering Moon and Hyundai's union leaders to stage walkouts. The vote is a blow to Hyundai, whose improvement in labor relations helped the carmaker and affiliate Kia Motors Corp. increase sales faster than any other major global auto group the past four years.
Hyundai Motor estimates strikes from 1987 to 2008 led to lost sales of more than 1 million vehicles valued at 11.6 trillion won ($10 billion).
"This kind of harking back to the past is not helping Korea," said James Rooney, Seoul-based CEO of consulting firm Market Force Co. "Foreign investors have already got a distorted view of Korea. They think we are a place that has these terrible riots and steel-club wielding people and people setting themselves on fire and stuff like that. And so when they hear about this, it will just be, 'Oh, Korea again.'"
Hyundai Motor, which has the nation's biggest guild, has symbolized the decline in clashes with unions that had plagued South Korean businesses as wages improved and employers shifted production overseas. The number of South Korean work days lost on labor disputes fell to 429 by 2011, a 73 percent drop from a decade ago, according to data compiled by the nation's Ministry of Employment and Labor.
Workers at Seoul-based Kia, which counts Hyundai Motor as its biggest shareholder, also voted Wednesday in favor of pursuing a strike for the first time since 2009.
That means workers at Hyundai Motor and Kia will go on an eight-hour stoppage tomorrow, according to both unions. Subsequent walkouts haven't been announced.
Hyundai Motor and Kia workers are demanding a 151,696 won ($132) increase in monthly base pay and that the companies return 30 percent of net income to employees as bonuses, said Kim Gi Hyuk, a Hyundai Motor union spokesman. Other demands include switching Hyundai Motor's plants to two eight-hour shifts from the current double 12-hour rotation system, according to Kim.
Moon sought the union vote after wage negotiations that began in May failed to yield an agreement. Hyundai Motor's union walked out of negotiations in late June, saying management lacked sincerity. Hyundai Motor's management will seek further talks to resolve its differences with the union, the company said in an e-mail today.
While Hyundai Motor, where union workers earn an average of about 45 million won a year, has periodically faced partial stoppages in the past four years because of labor disputes, none was officially sanctioned and they rarely lasted beyond several hours. Hyundai Motor's last full-blown strike occurred in 2008, when a 12-day walkout cost the company an estimated 44,645 vehicles, or 691 billion won, according to Hyundai Motor.
Under Korean rules, organized work stoppages are legal only if the union files for a 10-day mediation period to the National Labor Relations Commission and the majority of union members approve a strike. Failure to do so can result in the company filing an injunction to prevent walkouts.
Moon was elected as Hyundai's union leader last year after promising to be a tougher negotiator than his predecessor, Lee Kyung Hoon, who was elected to a two-year term in 2009 after pledging to curb unnecessary strikes.
Past Hyundai protests have resulted in violent clashes in which unionists would wield steel pipes and throw Molotov cocktails at police. In 1993, demonstrations were so disruptive that the Bank of Korea lowered its gross national product estimate.
Moon, who joined Hyundai Motor's union in 1988, said in a November interview that his activism in past protests led him to be arrested four times and laid off in 1992, 1995 and 1998. Unionists who get fired in labor disputes often get reinstated after lodging appeals to the nation's labor commission, Kim at the union said by phone.
A strike may be a lesser blow to Hyundai Motor than in past years after the company expanded production in the U.S., China, India and Turkey. South Korean plants accounted for 46 percent of Hyundai Motor's production capacity in 2011, down from 60 percent in 2008 and 93 percent in 2000.
"The radical labor union was also a reason behind Hyundai's expansion overseas," said Lee Sang Hyun, an analyst at NH Investment & Securities Co. "It's an Achilles' heel to the company."
Global factories won't be able to make up for prolonged stoppages in South Korea because overseas plants from the U.S. to China are operating near full capacity.
Chanwook Park, a Seoul-based analyst at Deutsche Bank AG, wrote in a July 1 report that the likelihood of a protracted strike at Hyundai Motor would be low and that a stoppage would last two weeks at most. Employees going on strike would stand to lose overtime payments and the 35 shares allocated to each employee for not engaging in strikes, according to Park.
For Hyundai and Kia, the possible strike looms as the South Korean carmakers seek to fend off Japanese automakers, led by Toyota Motor Corp., which are regaining market share they lost after last year's natural disasters in Japan and Thailand.
Hyundai Motor sold 2.2 million vehicles worldwide for the first half of this year, up 12 percent from a year earlier, according to an e-mailed statement. Hyundai and Kia are also bucking the slump in Europe by increasing sales in the shrinking market.
Hyundai Motor, whose profit has tripled in the past three years, will probably report a second-quarter net income of 2.4 trillion won, according to the average of 21 analyst estimates compiled by Bloomberg.
For the year, analysts project profit growth easing from 2011 as competition intensifies and economic growth slows.
"It's not the best time to choose to attack your employer, who's been very successful but who's going to have to survive these market downturns along with everybody else," Market Force's Rooney said.