Hyundai Wia Union Opposes Sale of Defense Division Despite 86% Revenue Surge, Warns of Corporate Instability

The Gyeongnam Branch Hyundai Wia Chapter of the Korean Metal Workers' Union has taken a strong stand against the proposed sale of Hyundai Wia's Special Business Division.

On July 27, the Hyundai Wia Chapter of the Metal Workers’ Union Gyeongnam Branch held a press conference at the Gyeongnam Provincial Government’s press center and declared, "We firmly oppose the unilateral push by Hyundai Motor Group and Hyundai Wia management to sell Hyundai Wia's Special Business Division to Hyundai Rotem."

The Korea Metal Workers' Union Gyeongnam Branch Hyundai Wia Chapter is holding a press conference opposing the sale of Hyundai Wia's Special Business Division.
Photo by Se-ryeong Lee

The union claimed, "Hyundai Motor Group and Hyundai Wia are using the pretext of defense industry integration and focusing on new businesses as a convenient excuse, but this sale is in reality nothing more than a unilateral, closed-door transaction—offering up Hyundai Wia's most powerful growth engine and most valuable business unit as a sacrifice for restructuring the group’s ownership structure."

The union continued, "The Hyundai Wia Special Business Division is the exclusive manufacturer of the K9 self-propelled howitzer barrels and K2 main battle tank guns. Compared to 2022, defense sales have increased by 86% in 2024, and defense revenue is on the verge of surpassing 400 billion won. It is difficult to accept the idea of selling a future growth business, which is certain to experience more than 10% compound annual growth, at a bargain price."

The union also expressed concerns, stating, "If only the high-profit division is separated from Hyundai Wia, the company will be reduced to a low-margin parts supplier within Hyundai Motor Group. If, after the machine tool business, the defense business is also sold off, the future for Hyundai Wia will inevitably be chronic low profitability and a relegation to a mere subcontracted supplier within the group."

They pointed out that "although the success of the Special Business Division is due to the skills and expertise accumulated by frontline workers, there has been no communication or consultation whatsoever with the onsite workforce. Issues such as the structure of the deal, employment succession methods, and the scope of collective bargaining inheritance are all being discussed behind closed doors."

Accordingly, the union demanded the immediate cancellation of the unilateral sale of Hyundai Wia's Special Business Division, an end to closed-door negotiations and the public disclosure of negotiation details, and direct negotiations with the union.

Kim Ilsik, head of the Gyeongnam branch of the Korean Metal Workers' Union, is speaking at a press conference opposing the sale of Hyundai Wia's Special Business Division.
[Photo by Lee Seryeong]

Il-sik Kim, the branch chief, stated, "The AI-powered physical robots and integrated thermal management systems, which Hyundai Wia management touts as future growth engines, are still only in their infancy, and it will likely be four to five more years before they turn a profit. Given this situation, it is natural for Hyundai Wia’s defense business—currently maintaining a stable operating profit margin of over 20%—to remain part of the company, but the group is unilaterally pushing for a sale."

He added, "Even if employees of the Special Business Division are able to maintain employment as they move to the new company, if the business is spun off and the operating profit drops by almost 39%, the job security and succession of remaining employees could be threatened. If the division—which could offset losses or fund investments in the AI-powered robot and thermal management businesses—is sold, it could ultimately undermine Hyundai Wia’s core operations."

He further commented, "Currently, operating margins for Hyundai Wia’s automotive parts business stand at just 1%. In order for Hyundai Wia to survive, it must retain the Special Business Division. Without it, not only will the company struggle to maintain its current structure, but there will also be no capacity for investing in future growth businesses."

On this day, the union warned that if the sale of Hyundai Wia's Special Business Division is not withdrawn, they will launch either a general strike in connection with the Metal Workers’ Union in August or separate protest actions.

This content was produced with the assistance of AI translation services.