Hyundai Case Study

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Asia Pacific Business Review
Vol. 12, No. 2, 131–147, April 2006

Globalization and Employment
Relations in the Korean Auto Industry:
The Case of the Hyundai Motor
Company in Korea, Canada and India
RUSSELL D. LANSBURY*, SEUNG-HO KWON** & CHUNGSOK SUH†
*University of Sydney, **School of International Business, University of New South Wales, †
University of New South Wales
ABSTRACT Examination is made of the complex interactions between globalization and employment relations as reflected in the operations of the Hyundai Motor Company (HMC) in Korea, Canada and India. After the closure of its short-lived attempt to manufacture cars for the North American market from Canada, the HMC ‘relaunched’ its globalization strategy in India in 1998. An examination of Hyundai’s experience in both countries suggests that employment relations is likely to continue to be an evolving blend of company-specific policies and locally-based practices.

KEY WORDS : Globalization, management, unions, employment relations, production systems, Korea, Canada, India

Introduction
The effects of globalization on employee relations are widely debated. One view is that globalization has created pressures for convergence between different national settings, particularly as multinational enterprises extend their manufacturing and other operations across a variety of countries. Alternatively, it is argued that at national-level institutional arrangements play an important role in creating divergence between employment relations in different countries. As a consequence, globalization is not likely to lead to universal convergence of national patterns of employee relations. A third view rejects the simple convergence/divergence dichotomy and argues that there are complex interactions between global and national (or local) forces which shape the outcome of employee relations (Lansbury, 2002). The Korean automobile industry offers an opportunity to analyse this debate as it pursues a strategy of globalization and begins the process of expanding production beyond Korea and building plants in other parts of the world.

Correspondence Address: Professor Russell Lansbury, Faculty of Economics and Business, University of Sydney, NSW 2006, Australia. Email: r.lansbury@econ.usyd.edu.au

1360-2381 Print/1743-792X Online/06/020131-17 q 2006 Taylor & Francis DOI: 10.1080/13602380500532180

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R. D. Lansbury et al.

Globalization of the Korean auto industry has occurred in a very short period of time. It began as a repair industry for vehicles released during and after the Korean War in the early 1950s. The first assembly plant in 1955 had an annual capacity of 1,500 units. When the Korean government launched the first Five Year Economic Development Plan in 1962, it introduced the ‘Automobile Industry Protection Law’ and began to promote the auto sector as a key element in emerging Korean manufacturing industry. However, the fledging Korean auto sector experienced uncertainty and fluctuations during the 1960s. The Saenara Motor Company was established in 1962 under a technical alliance with Nissan, but due to shortage of foreign exchange went bankrupt and was taken over by the Shinjin Motor Company which was allied to Toyota. Shinjin assembled the Corona in a complete knock-down (CKD) form of production, whilst the Hyundai Motor Company began production of the Cortina in a technical alliance with Ford. The Korean government announced a ‘localization plan’ in 1970 under which the proportion of local content in passenger cars was supposed to increase from 38 per cent in 1970 to 100 per cent by 1972. However, the localization rate barely reached 50 per cent by 1972.

A rapid period of growth occurred in the Korean auto industry during the period 1972– 82. The government announced ‘A Long Term Plan to Promote the Automobile Industry’ in 1974 which had three major targets: to achieve a localization rate of 85 per cent by 1975; a target of 80 per cent of...
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