Hyundai Steel’s Labor Negotiations Amid Economic Strife
Hyundai Steel Co., South Korea’s second-largest steelmaker, faced a turbulent year in 2024, with strikes disrupting its operations and placing significant strain on its workforce. In an attempt to end the labor unrest, Hyundai Steel reached a wage agreement with its labor union, although the union has expressed dissatisfaction with the deal. The agreement comes after a monthslong strike and a temporary shutdown of one of its key production facilities. As part of the deal, Hyundai Steel agreed to increase its workers' monthly basic salary by 101,000 won ($71) and grant a bonus package consisting of 4.5 months of salaries plus 10.5 million won in additional bonuses.
However, the union has not entirely embraced the deal, labeling it "unsatisfactory". The workers remain concerned about the ongoing economic challenges affecting the company, including the global trade war and prolonged downturn in the steel industry. Hyundai Steel’s emergency management mode has been in effect since March 14, 2024, as the company braces for further difficulties stemming from international trade tensions, especially in the context of the 25% tariffs imposed by the U.S. government on steel imports.
Production Shutdowns & Strikes: The Strain on Hyundai Steel’s Operations
The labor strike at Hyundai Steel intensified earlier in the year, leading to a significant temporary suspension of its key cold-rolled steel facility in Dangjin, located about 80 kilometers southwest of Seoul. The shutdown, lasting from February 24 to March 31, was a direct consequence of the workers' demands for higher wages. This particular pickling line/tandem cold mill facility is vital to Hyundai Steel's integrated operations, and its suspension highlighted the mounting challenges the company faced during this period.
In addition to the strikes, Hyundai Steel is also dealing with the oversupply in the steel reinforcement bar arket, resulting in the temporary closure of one of its three domestic rebar plants for the entire month of April. This move was necessitated by the excess supply in the market, which has affected the pricing and demand for steel products. Such decisions underline the tough economic circumstances in which Hyundai Steel is operating.
A Response to U.S. Tariffs: Hyundai Steel’s Strategic U.S. Expansion
The ongoing trade war between the U.S. and its trading partners has placed significant pressure on Hyundai Steel, particularly after the Trump administration’s decision to impose a 25% tariff on steel imports from various countries, including South Korea. In response to this external challenge, Hyundai Steel has announced a major strategic investment in the U.S. market. The company plans to invest approximately $5.8 billion to build a new electric arc furnace-based integrated steel mill in Louisiana, with the goal of starting production by 2029.
This move is designed to mitigate the impact of U.S. tariffs by producing steel domestically within the U.S. and circumventing the tariff imposition. The plant will focus on producing high-quality steel using modern technology, and it is expected to enhance Hyundai Steel’s competitiveness in the North American market, especially by addressing the demands of U.S. manufacturers and infrastructure projects. The decision to invest in Louisiana represents a bold strategic shift, aiming to future-proof the company amid increasingly challenging global trade conditions.
Key Takeaways:
• Hyundai Steel Co. reached a wage agreement with its labor union for 2024, increasing monthly salaries by 101,000 won ($71) and offering 4.5 months of salaries plus 10.5 million won in bonuses.
• The union termed the deal "unsatisfactory" due to the global trade war, steel industry downturn, and the company's emergency management mode.
• Hyundai Steel suspended its cold-rolled steel facility in Dangjin from February 24 to March 31, following a strike by workers demanding pay raises.
• One of its rebar plants will be closed for the month of April due to oversupply in the steel market.
• In response to the 25% U.S. tariffs, Hyundai Steel plans to invest $5.8 billion in a new electric arc furnace-based steel mill in Louisiana, aiming for production by 2029.
• The strategic investment in the U.S. market is part of Hyundai Steel’s effort to mitigate the effects of international tariffs and strengthen its position in North America.
