Beijing Hyundai Motor shows fast growth without labor disputes

Chinese workers were assembling parts on both sides of production lines at the third factory of Beijing Hyundai Motor in Beijing on Dec. 27, 2013. Some looked like late teens. The electronic notice board indicated 99. It meant the operation rate was 99 percent.

The factory whose construction was completed in September 2012 is 75 kilometers northeast from the Tiananmen Square, the center of Beijing. The 1.45 million-square meter factory was designed to produce 300,000 vehicles per year. In less than two months from the completion, the company started an addition to the factory capable of producing 150,000 vehicles per year due to the skyrocketing demand in China.

If new assembly lines start production on Jan. 20, the automaker’s three factories combined can produce 1.05 million vehicles per year (its first and second factory can produce 300,000 vehicles, respectively, and the third can churn out 450,000 vehicles). If the fourth factory (production capacity of around 300,000 vehicles per year), which is awaiting the approval of the Chinese government is completed, its annual production capacity jumps to 1.35 million cars. The third factory achieved the operating rate of 98 percent in two weeks from the mass production in June 2012. The secret is the flexibility of labor forces. After building the third factory, it filled its workers who had worked at the first and the second factories. New employees were evenly deployed to three factories. The relocation of veteran workers minimized the period for adaptation to the new factory.

Workers work 11 hours on day and night shifts. They work regular eight working hours and three hours of overtime. “We assess all employees twice a year and pay them based on their performance,” said Cho Geun-hee, a manager at Beijing Hyundai Motor. “Most employees arrive half an hour earlier than their working time for preparation.”

The hours per vehicle (HPV) of the third factory in Beijing are 16.5 hours, a decrease of 2.3 hours from 18.8 hours in 2012, while that of Hyundai Motor factories in Korea is 28.4 hours on average.

The labor union is also cooperative with the company. “If a company shows strong performance, employees can enjoy more benefits. A company can develop when employees work hard,” said Wang Zhen Ping, the head of the labor union. “As Beijing Hyundai Motor grows fast, employees feel proud.”

Hyundai Motor, which started a negotiation over a joint venture with Beijing Automotive Group in April 2002, started to build production lines in July even before the foundation of Beijing Hyundai Motor in October 2002. It changed the truck factory of Beijing Automotive Group into sedan production lines with the production capacity of 50,000 vehicles per year. As a result, Beijing Hyundai was able to produce 1,002 EF Sonatas in December, only two months after the foundation of the joint venture. The Chinese automotive industry started to use the buzzword the “Hyundai speed.” Many say that fast decision-making was a key element to Beijing Hyundai Motor’s success to sell a million cars per year only in 11 years from its foundation.

Beijing Hyundai Motor pins a high hope on Mingtu, a model developed for the Chinese market and showcased in November 2013. It is likely to become a big hit as around 16,000 vehicles of the customized model were sold in November and December. Pyeon Jong-geun, a director at Beijing Hyundai Motor, said, “Mingtu could help Beijing Hyundai to catch up with Volkswagen or GM in China.”