A Mercedes and Volkswagen supplier's daily shipments of parts have fallen 50%, due to the South Korean trucker strikes, report says
Beatrice Nolan
Mon, June 13, 2022
Hankook Tire & Technology, a supplier to major carmakers, has seen its shipments fall, per Reuters.
The shipment issues are a result of a week-long truckers' strike in South Korea.
Truck drivers are striking over low pay amid rising fuel costs around the world.
Truck drivers striking in South Korea are causing supply chain issues for major carmakers, Reuters reports.
Han kook Tire & Technology Co Ltd, a large global tire brand, is a key supplier for carmakers such as Mercedes-Benz and Volkswagen. The company has seen daily shipments fall about 50% due to the truck drivers' protest in South Korea, a spokesperson for the company told Reuters.
Han kook Tire & Technology did not immediately respond to Insider's request for comment made outside of normal working hours.
640,000 tires, worth more than $44 million, had faced shipment issues as of Sunday, according to a statement from the South Korean industry ministry, as reported by Reuters.
Monday marks the seventh day of the strike as thousands of workers protest low pay and a lack of government subsidies amid rising fuel costs worldwide. The strike is estimated to have caused South Korean industries accumulate losses of around $1.24 billion, according to the country's industry ministry's statement.
The week-long strike has significantly affected the country's automobile industry. Around 5,400 vehicles, worth around $200 million, have been lost production as of Monday, per the industry ministry's statement.
The South Korean industry ministry did not immediately respond to Insider's request for comment made outside of normal working hours.
South Korean carmaker, Hyundai, has also faced significant production cuts since the strike began. On Friday, striking workers cut production at Hyundai's Ulsan factories to one-tenth of its usual output, union officials told Reuters.
Hyundai's Ulsan factories produce around 6,000 cars daily and as of Friday, the strike has cost Hyundai around 3,800 vehicles, per Reuters.
The disruptions in South Korea come as another hit to the global supply chain which has been plagued with signification disruptions in the wake of the COVID-19 pandemic and the Ukraine War.
Beatrice Nolan
Mon, June 13, 2022
Hankook Tire & Technology, a supplier to major carmakers, has seen its shipments fall, per Reuters.
The shipment issues are a result of a week-long truckers' strike in South Korea.
Truck drivers are striking over low pay amid rising fuel costs around the world.
Truck drivers striking in South Korea are causing supply chain issues for major carmakers, Reuters reports.
Han kook Tire & Technology Co Ltd, a large global tire brand, is a key supplier for carmakers such as Mercedes-Benz and Volkswagen. The company has seen daily shipments fall about 50% due to the truck drivers' protest in South Korea, a spokesperson for the company told Reuters.
Han kook Tire & Technology did not immediately respond to Insider's request for comment made outside of normal working hours.
640,000 tires, worth more than $44 million, had faced shipment issues as of Sunday, according to a statement from the South Korean industry ministry, as reported by Reuters.
Monday marks the seventh day of the strike as thousands of workers protest low pay and a lack of government subsidies amid rising fuel costs worldwide. The strike is estimated to have caused South Korean industries accumulate losses of around $1.24 billion, according to the country's industry ministry's statement.
The week-long strike has significantly affected the country's automobile industry. Around 5,400 vehicles, worth around $200 million, have been lost production as of Monday, per the industry ministry's statement.
The South Korean industry ministry did not immediately respond to Insider's request for comment made outside of normal working hours.
South Korean carmaker, Hyundai, has also faced significant production cuts since the strike began. On Friday, striking workers cut production at Hyundai's Ulsan factories to one-tenth of its usual output, union officials told Reuters.
Hyundai's Ulsan factories produce around 6,000 cars daily and as of Friday, the strike has cost Hyundai around 3,800 vehicles, per Reuters.
The disruptions in South Korea come as another hit to the global supply chain which has been plagued with signification disruptions in the wake of the COVID-19 pandemic and the Ukraine War.
Sun, June 12, 2022
By Byungwook Kim and Heekyong Yang
SEOUL (Reuters) -Striking South Korean truckers are considering blocking shipments of coal to a power plant if the government rejects their demands for minimum pay guarantees, a senior trade union official said on Monday.
The Cargo Truckers Solidarity Union, on strike for a seventh day, is weighing several options to press its demands, including stopping coal to generate electricity and shutting down petrochemical complexes by blocking their shipments in and out.
"We are thinking of a complete blockade," union leader Kim Jae-gwang told Reuters, referring to coal shipments to a power plant in Gunsan, North Jeolla Province that he did not name, which uses trucks for its coal.
"But we hope such a situation doesn't happen."
The impact of a blockade of the power plant would be limited in terms of national electricity output, even in the high-demand summer, but would mark a significant intensification of the truckers' action.
The strike has cost key industrial sectors more than $1.2 billion in lost production and unfilled deliveries, the government estimated on Monday, as the damage spreads deeper through Asia's fourth-largest economy.
The union is protesting against soaring fuel prices and demanding minimum pay guarantees. Four rounds of negotiations with the government have failed to find a compromise.
Some 7,050 people, or about 32% of union members, were striking on Monday, according to an updated transport ministry estimate. The ministry said in a statement it plans to continue talks with the union to resolve the situation.
Kim said his members were for now letting some movement of traffic to prevent the shutdown of petrochemical facilities, which would cost a lot of time and money to restart, but the union would "reconsider" that if the government did not show willingness to negotiate.
The strike is a major test for South Korea's new conservative president Yoon Suk-yeol, raising the risk of eroding his support, distracting him from his agenda and sowing the seeds of long-term antagonism with powerful unions.
On Monday, Yoon called for ways to reduce the impact of the strike on industry. A transport ministry official said no new meeting with the union was scheduled.
The strike has forced steelmaker POSCO to shut some plants because of a lack of space to store finished products.
It also caused manufacturing losses of 5,400 vehicles for South Korean automakers between June 8-11, according to the Korea Automobile Manufacturers Association, with Hyundai Motor cutting production for some assembly lines. Cement makers have also reduced output.
CHIPS NOT DISRUPTED
Petrochemical firms have seen average daily shipments from factories tumbling 90% as truckers target complexes in Ulsan, Yeosu and Daesan, an industry association said.
Two petrochemical industry sources, who declined to be identified, told Reuters that although naphtha crackers are still running at previous rates, some companies may be forced to halt them as soon as later this week if the situation continues.
There have been as yet no reports of major production disruption at Samsung Electronics, SK Hynix and other semiconductor firms.
Kim Yang-pang, a researcher at Korea Institute for Industrial Economics & Trade, estimated Samsung Electronics and SK Hynix and their suppliers had enough supplies of raw materials in stock for at least two weeks.
Samsung declined to comment, while SK Hynix did not immediately respond to a request for comment.
The government has urged the truckers to return to work but said it would seek to reflect their demands in legislation. It has also deployed some 100 military vehicles to help companies with shipments.
The truckers are demanding an extension of subsidies, set to expire this year, that guarantee minimum wages as fuel prices rise. The Yoon administration says it is up to parliament to change the legislation.
As supply bottlenecks plague the global economy, any prolonged slowdown in the production and shipment of chips, petrochemicals and autos could add to fears about rising inflation and slowing growth.
South Korea's inflation is set to hit a 24-year high of 4.8% this year, the Organisation for Economic Cooperation and Development said last week, cutting its growth forecast to 2.7% from a December projection of 3.0%.
(Reporting by Byungwook Kim and Heekyong Yang; Additional reporting by Joyce Lee; Writing by Choonsik Yoo; Editing by Stephen Coates, Edwina Gibbs and Jan Harvey)
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