By Hyunjoo Jin
SEOUL, May 25 (Reuters) - South Korea's Hyundai Motor said it would resume normal production at its local plants as early as Thursday after police broke up a week-long strike at a parts supplier, averting major production losses.
Shares in Hyundai Motor and its affiliate Kia Motors rose between 1 and 2 percent on Wednesday after the police action re-opened the occupied factory at Yoosung Enterprise.
Yoosung shares also extended their rally, jumping more than 10 percent to a record high as output of piston rings used by Hyundai and Kia restarted.
'We expect our diesel engine production to resume starting this afternoon, and car production to go back to normal as early as tomorrow. It is a relief that the strike ended early,' a Hyundai spokesman said, adding that the strike had not caused a major production loss.
The strike led to a combined production loss of less than 1,000 for Hyundai and Kia, which rank fifth in global car sales, as of Tuesday.
Yoosung Enterprise, which provides 70 percent of the piston rings used in Hyundai and Kia cars, halted production from May 18 after union members occupied production lines over disagreements on new wage and shift systems.
The strike hit production of some models including the diesel versions of Hyundai's Santa Fe and Kia's Carnival SUVs and stopped diesel engine production at Hyundai. Hyundai and Kia, the world's fifth-biggest car maker, warned of a production disruption of most of its cars as its parts inventory was running low.
'The damage is not big and production will normalise this weekend at the latest,' said Lee Sang-hyun, an analyst at NH Investment & Securities.
LABOUR SHOWDOWN
Labour issues have been one of the biggest hurdles for South Korean car makers which are bracing for their annual collective bargaining round with labour unions.
'Labour tension will reach its peak before summer holidays,' Lee said.
But he expected that a full labour strike is unlikely this year, expecting key issues to be resolved and noting that Hyundai avoided its annual strike for a second consecutive year last year.
The latest labour dispute highlighted Hyundai's heavy reliance on engine parts from Yoosung and its need to diversify component sourcing, analysts said.
The piston ring made by Yoosung workers costs only $1, but is used in most Hyundai and Kia models.
Yoosung restarted production from Tuesday evening after the police broke up the sit-in strike, a company official said.
($1 = 1093.400 Korean Won)
(Reporting by Hyunjoo Jin; Editing by Jonathan Hopfner) Keywords: HYUNDAI SUPPLIER/ (hyunjoo.jin@thomsonreuters.com)(82-10-2960-4728)(Reuters Messaging: hyunjoo.jin.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SEOUL, May 25 (Reuters) - South Korea's Hyundai Motor said it would resume normal production at its local plants as early as Thursday after police broke up a week-long strike at a parts supplier, averting major production losses.
Shares in Hyundai Motor and its affiliate Kia Motors rose between 1 and 2 percent on Wednesday after the police action re-opened the occupied factory at Yoosung Enterprise.
Yoosung shares also extended their rally, jumping more than 10 percent to a record high as output of piston rings used by Hyundai and Kia restarted.
'We expect our diesel engine production to resume starting this afternoon, and car production to go back to normal as early as tomorrow. It is a relief that the strike ended early,' a Hyundai spokesman said, adding that the strike had not caused a major production loss.
The strike led to a combined production loss of less than 1,000 for Hyundai and Kia, which rank fifth in global car sales, as of Tuesday.
Yoosung Enterprise, which provides 70 percent of the piston rings used in Hyundai and Kia cars, halted production from May 18 after union members occupied production lines over disagreements on new wage and shift systems.
The strike hit production of some models including the diesel versions of Hyundai's Santa Fe and Kia's Carnival SUVs and stopped diesel engine production at Hyundai. Hyundai and Kia, the world's fifth-biggest car maker, warned of a production disruption of most of its cars as its parts inventory was running low.
'The damage is not big and production will normalise this weekend at the latest,' said Lee Sang-hyun, an analyst at NH Investment & Securities.
LABOUR SHOWDOWN
Labour issues have been one of the biggest hurdles for South Korean car makers which are bracing for their annual collective bargaining round with labour unions.
'Labour tension will reach its peak before summer holidays,' Lee said.
But he expected that a full labour strike is unlikely this year, expecting key issues to be resolved and noting that Hyundai avoided its annual strike for a second consecutive year last year.
The latest labour dispute highlighted Hyundai's heavy reliance on engine parts from Yoosung and its need to diversify component sourcing, analysts said.
The piston ring made by Yoosung workers costs only $1, but is used in most Hyundai and Kia models.
Yoosung restarted production from Tuesday evening after the police broke up the sit-in strike, a company official said.
($1 = 1093.400 Korean Won)
(Reporting by Hyunjoo Jin; Editing by Jonathan Hopfner) Keywords: HYUNDAI SUPPLIER/ (hyunjoo.jin@thomsonreuters.com)(82-10-2960-4728)(Reuters Messaging: hyunjoo.jin.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
