Hyundai Steel’s Financial Crisis: How the Company is Navigating Labor Disputes and Market Pressures
On March 14, 2025, Hyundai Steel declared that it was entering an emergency management system to address worsening financial conditions, labor disputes, and operational challenges. The company’s decision follows months of intense negotiations with its labor union, which have failed to result in an agreement over 2024 wage negotiations. The union is demanding higher performance bonuses, while the company’s management is unwilling to meet these demands due to declining business conditions.
Labor Strikes and Negotiation Breakdown
Hyundai Steel and its labor union have been in negotiations since September 2024, discussing wage increases and collective agreements for 2024. The union has been pushing for the highest performance bonuses within the Hyundai Group, but management has resisted, citing significant financial losses. After 23 rounds of negotiations, a resolution is still far from being achieved, and labor strikes have escalated, leading to disruptions, especially in cold-rolled steel production.
The company’s proposal to the union included a performance bonus of 26.5 million won per person (450% of the base salary, plus a fixed bonus of 10 million won). However, the union rejected the offer, continuing to demand higher bonuses. This has led to a deadlock and prolonged strikes, affecting production capabilities and worsening the company’s financial outlook.
Hyundai Steel expressed concerns about the negative impact these ongoing labor disputes may have on both its operations and the broader domestic steel industry.
Cost-Cutting Measures and Salary Reductions
To address the financial strain caused by labor disputes and poor market conditions, Hyundai Steel has enacted cost-saving measures. These include a 20% salary reduction for all executives, which is part of the company’s broader effort to reduce operational costs. The company has also decided to cut down on overseas trips to further minimize expenses.
As part of these drastic measures, Hyundai Steel has announced that it will consider voluntary retirements from its entire workforce. This measure aims to reduce the number of employees and decrease labor costs in the wake of falling profits and declining domestic demand. Additionally, Hyundai Steel has indicated it might consider implementing layoffs if the voluntary retirement program does not yield sufficient savings.
Plant Shutdowns and Employee Transfers
In response to the decline in the domestic construction market, Hyundai Steel has been forced to reduce operations at its Pohang Plant 2, one of the company’s key production facilities. This is a direct result of lower demand for steel in construction, which has severely impacted Hyundai Steel’s production schedules and sales. As part of the cost-cutting strategy, the company is also accepting voluntary retirement applications from technical staff at this plant.
Furthermore, Hyundai Steel is offering employee transfers to other facilities, including the Dangjin Steelworks in South Chungcheong Province and the Incheon Plant. These transfers are part of the company's broader effort to optimize its workforce and streamline its operations while mitigating the negative impacts of the current crisis.
Global Steel Market Challenges and Anti-Dumping Lawsuits
Hyundai Steel is also facing significant external challenges from the global steel market. The company has been struggling to compete against low-cost steel imports from China and Japan, which have been severely impacting local steel prices and pushing Hyundai Steel’s margins even lower. In response, Hyundai Steel has filed an anti-dumping lawsuit to protect itself from what it perceives as unfair trade practices by foreign steel producers, specifically targeting hot-rolled plates and products.
The lawsuit, which is a crucial effort to defend the company’s interests, reflects the increasing difficulty Hyundai Steel faces in maintaining profitability under such adverse conditions. The competition from foreign producers has led to a significant decrease in the prices of locally produced steel, which has directly impacted Hyundai Steel’s ability to generate sufficient revenue.
Financial Losses and Projections for the Future
For the 2024 fiscal year, Hyundai Steel is projected to experience a net loss of 65 billion won due to a combination of labor unrest, declining market demand, and increased competition. The company is attempting to manage this loss through its cost-cutting measures, such as executive salary reductions and employee transfers, but it remains uncertain whether these actions will be sufficient to turn the situation around in the short term.
Hyundai Steel’s Strategy Going Forward
Looking ahead, Hyundai Steel’s management is focusing on two key areas to navigate the crisis: reducing costs and stabilizing labor relations. However, the ongoing labor disputes remain a significant barrier to achieving both goals. The company has stated that labor-management conflict is expected to continue, which could have a negative impact on its operations and the wider domestic steel industry.
In addition to these internal efforts, Hyundai Steel will need to continue managing external pressures, particularly the impact of low-cost imports on its pricing structure. The company’s anti-dumping lawsuit could provide some relief if successful, but the ongoing challenges in both domestic and international markets will require ongoing adaptation and strategic shifts.
Key Takeaways:
• Emergency Management System: Hyundai Steel has entered an emergency management phase to address severe financial challenges.
• Labor Strikes: Labor negotiations have been ongoing since September 2024, with strikes disrupting production, particularly in cold-rolled steel.
• Salary Reductions: Hyundai Steel is implementing a 20% salary reduction for all executives to help reduce costs.
• Voluntary Retirement: The company is accepting voluntary retirement applications from employees in an effort to minimize labor costs.
• Plant Shutdowns: Pohang Plant 2 operations have been reduced due to weak demand in the domestic construction market.
• Employee Transfers: Hyundai Steel is offering employee transfers to other plants as part of its cost-reduction strategy.
• Anti-Dumping Lawsuit: The company has filed an anti-dumping lawsuit against China and Japan to counteract unfair steel pricing practices.
• Projected Losses: Hyundai Steel expects a net loss of 65 billion won for the 2024 fiscal year due to poor market conditions and labor disruptions.
• Ongoing Labor Conflict: The labor-management conflict is expected to continue, which could further affect the company’s operations.
