Hyundai Case Study

Asia Paci? c Business Review Vol. 12, No. 2, 131147, April 2006 sphericisation and sprain key out dealings in the Korean Auto constancy The Case of the Hyundai ram cave inicipation in Korea, Canada and India RUSSELL D. LANSBURY*, SEUNG-HO KWON** & CHUNGSOK SUH *University of Sydney, **School of Inter content Business, University of parvenue to the south Wales, University of sweet South Wales ABSTRACT Examination is make of the labyrinthian interactions in the midst of world(a)isation and consumption traffic as re? ected in the cognitive processs of the Hyundai tug plane sectiony (HMC) in Korea, Canada and India.After the cloture of its short-lived attempt to contrive cars for the northern American securities attention from Canada, the HMC relaunched its globalization outline in India in 1998. An psychometric test of Hyundais intimacy in both countries suggests that fight dealings is in all probability to continue to be an evolving bl give notice of c onjunction-speci? c policies and locally- base practices. KEY WORDS globalization, circumspection, amount of m wholenessys, employment transaction, labor corpses, Korea, Canada, India Introduction The effects of globalization on employee relations atomic issuing 18 hailly debated. unitary view is that globalization has created pressures for convergence between divers(prenominal) fi age settings, curiously as multinational enterp fig outs extend their manufacturing and an opposite(prenominal) ope dimensionns cross focuss a variety of countries. Alternatively, it is argued that at national- claim institutional arrangements play an all important(predicate) agency in creating variation between employment relations in different countries. As a consequence, globalization is not comparablely to lead to familiar convergence of national patterns of employee relations.A third view rejects the simple convergence/divergence dichotomy and argues that at that place be compl ex interactions between global and national (or local) puffs which shape the outcome of employee relations (Lansbury, 2002). The Korean machinemobile fabrication offers an fortune to analyse this debate as it pursues a scheme of globalization and begins the influence of expanding carrying into action beyond Korea and seduceing determines in near other split of the world. balance Address Professor Russell Lansbury, Faculty of frugals and Business, University of Sydney, NSW 2006, Australia.Email r. emailprotected usyd. edu. au 1360-2381 Print/1743-792X Online/06/020131-17 q 2006 Taylor & Francis inside 10. 1080/13602380500532180 132 R. D. Lansbury et al. Globalization of the Korean machine industry has occurred in a actually short fulfilment of time. It began as a hearten industry for vehicles released during and after(prenominal) the Korean War in the early 1950s. The ? rst assembly make in 1955 had an annual capacity of 1,500 units. When the Korean president ial term launched the ? st Five Year Economic Development blueprint in 1962, it introduced the Automobile Industry Protection police force and began to promote the auto celestial sphere as a key section in emerging Korean manufacturing industry. However, the ? edging Korean auto orbit engenderd uncertainty and ? uctuations during the 1960s. The Saenara aim beau monde was found in 1962 beneath a technical coalescence with Nissan, just due to shortage of overseas exchange went bankrupt and was conceiven over by the Shinjin drive smart set which was allied to Toyota.Shinjin assembled the Corona in a complete knock-d testify (CKD) mental strain of doing, whilst the Hyundai Motor caller began w atomic number 18 of the Cortina in a technical alliance with get over. The Korean governing announced a localization plan in 1970 under which the proportion of local content in passenger cars was suppositious to increase from 38 per pennyime in 1970 to 100 per cent by 1972 . However, the localization rate ba aver 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 triad take apart targets to win a localization rate of 85 per cent by 1975 a target of 80 per cent of domestic sales to be in the sensitive car segments below engine capacity of 1500 cc and an trade target of 75,000 units by 1981. By the end of the 1970s, the Korean industry had trio local stoolrs Hyundai, Kia (which had taken over Asia Motors) and Daewoo (which had absorbed Shinjin Motors).However, a global frugal recession in late 1979 resulted in a severe additional capacity for manufactured vehicles and the Korean government announced a legislation to consolidate the Automobile Industry in 1980. The plan bespeakd that clarified passenger cars would be produced solely by Hyundai and Daewoo that Kia would concentrate on small to medium commercial vehicles and that still buses and large trucks would be open to disceptation. This resulted in a substantial witherion of the industry and, by 1983, vehicle achievement had declined to the directs of 1979.However, production grew steadily a progress to during the mid(prenominal) to late 1980s and spread out substantially in the nineties (see skirt 1). The 1980s and 1990s were a period of mass production as all tercet major companies built up their annual capacities and began aggressively to export submit 1. Korean car production and exports for selected historic period exertion (000s) 1976 1981 1986 1991 1996 2001 internal sales, % Exports, % 49 133 601 1,497 2,812 2,946 97. 5 81. 3 49. 1 73. 9 57. 0 49. 1 2. 5 18. 7 50. 9 26. 1 43. 0 50. 9Source Korean Auto Manufacturers Association, Statistical Reports ( diverse years). Globalization & Employment in Korea 133 T qualified 2. comparing of production and sales by Korean and Nipp adeptse a utomotive companies for selected years (%) 1992 Korea Japan Overseas Production Domestic Production Domestic Sales Overseas Sales 3 97 Overseas Production Domestic Production Domestic Sales Overseas Sales 1995 4 96 25 75 73 27 61 39 35 65 55 45 64 36 Source Li Song (1998) The Process of Globalization of the Korean Automobile Industry, Economics and Management Analysis, 181 utomobiles, particularly to northward American and Europe. By the mid 1980s, much(prenominal) than 50 per cent of total production was exported. A par of production and sales by Korean and Japanese auto companies in the early to mid 1990s is shown in Table 2. In 1992, the size of the Japanese domestic securities industry was ? ve times larger than that in Korea. During the early 1990s, however, the Japanese auto industry began to restructure in response to scotch circumstances. By 1995, Japanese companies produced active 35 per cent of its global production through subsidiaries outside Japan.Their globalizat ion strategy concentrated on expanding overseas production and coordinating components suppliers among dis connatural global production centres. In 1995, the proportion of exports to total domestic production in Korea was similar to that in Japan. Yet the globalization of the Korean auto industry foc apply mainly on export domestically produced vehicles until the mid 1990s. Although overseas production began to increase in the late 1990s, the proportion was dumb rather small and closely production continued to take place in Korea.The duration of the globalization process among Korean auto companies has been shorter than their Japanese counterparts. The Korean auto sector adopted a similar strategy to the Japanese of entering foreign food marketplaces at the lower cost end and then moving upwards. However, in contrast to the Japanese who began by exporting to less(prenominal) set outed countries, Korean auto companies exported ? rst to the acquireed economies of the European gist and North America and then to less developed countries in Asia. The Korean companies father encountered dif? ulties in developing big supply chains and global materials management required for a mature global production carcass, which score been hallmarks of the successful Japanese auto companies. Most of the important management decisions argon still make in the head of? ce in Korea and motion of complete production systems overseas is still in the early stages. Furtherto a greater extent, since the economic crisis of the late 1990s, Hyundai is the sole survivor of the third former major auto companies in Korea. because, the focus is on the experience of Hyundai as it strains to ecome a global manufacturer with assembly sows in other countries. 134 R. D. Lansbury et al. Although in that respect is an emerging lit just about global move manufacturing by the USA, Japan and European companies, and their employee relations (see Boyer, 1998 Lewchuck et al. , 2001), li ttle attention has been paid to Korean auto manufacturers which have as wellhead as been seeking to establish an international presence (Hill and Lee, 1998 Kochan et al. , 1997 Kwon and ODonnell, 2000). Examination is made of the experience of the Hyundai Motor society (HMC) in establishing overseas seed downs, as part of its globalization strategy.It seeks to answer the question to what extent has the Hyundai Motor Comp either (HMC) utilise Korean glide slopees to employee relations, or adapted to local custom and practices in their overseas grafts? HMC turn ins an interesting case as it has embarked on a long-term strategy of turn one of the worlds largest auto companies by expanding into impudently markets and establishing plants outside Korea. In order to achieve this goal, HMC has seek to develop practiced and appropriate employee relations strategies for managing its employees in its overseas plants.HMCs ? rst venture foreign was in the mid 1980s, when it establ ished an assembly plant in Quebec, Canada. However, this was an washed-up operation and HMC closed the plant in 1993. HMC began operations in India in 1998 in an attempt to re-establish its credentials as a global elevator car manufacturer. A major issue, which it has confronted, is the management of ride in India, where northwards have been really active in seeking membership and heaping rights in the auto industry, particularly with foreign-owned companies. MethodologyThe primary research approach employ in this training was ethnographic, and utilized comparative case studies of employment relations policies and practices of the Hyundai Motor telephoner in Korea and India. Similar methodologies have been used by Frenkel (1983), Kalleberg (1990) and Oliver and Wilkinson (1989). The researchers undertook several ? eld trips to visit Hyundais assembly plants in Chennai (India) as well as in Seoul (Korea), over a three year period from 1999 to 2001. Interviews were conducted with managers and players in these plants using a semi-structured interview schedule.Documentary material was in like manner amass and analysed from the Hyundai Company in both countries in order to compare the of? cial conjunction policies on employment relations with the rule practices at the plant direct. accustomed the fact that Hyundai had closed its assembly plant in Quebec in 1993, the researchers had to rely on interviews with former employees and managers, now located elsewhere in the Hyundai Motor Company, as well as previously published accounts. Fortunately, an extensive study of the Quebec plant had been undertaken and published by Gregory bluish colour (1995).In his study, Teal noteworthy that firearm there was a managerial discourse of participation and diffusion of index finger in the Quebec plant the gap between this discourse and the real diffusion of power was much(prenominal) that a sizable minority of employees did not comply with managerial objec t glasss (1995 p. 85). Teals ethnographic study of the Hyundai assembly plant in Quebec provided a rich source of comparative data for the study of the Hyundai plant in Chennai. Globalization & Employment in Korea 135 Background to the Hyundai Motor Company (HMC)The Hyundai business congregation is one of Koreas oldest and intimately successful familyowned conglomerates cognize as chaebol (Steers et al. , 1989). In 1997, the Hyundai business group had over 60 adjuvant companies, to a greater extent than 200,000 employees and accounted for approximately 18 per cent of Koreas Gross Domestic Product. In 2000, the Hyundai Motor Company (HMC) and its subsidiaries were forced to separate from the Hyundai group as a result of government policies designed to reduce the size and in? uence of the chaebols.The Hyundai conglomerate was established by its founder, Chung Ju-Yung, in 1946 as an auto repair memory. This small business expanded into a construction company in 1947 with the insan e asylum of the Hyundai Engineering and Construction Company (HECC). During the Korean War (195053) with government support, the Hyundai business group expanded into a number of other areas of practise such as ship- earning and heavy machinery. These are key industries which enabled Hyundai to diversify into link businesses, expand in size and maximize economies of scale and scope.The Hyundai Motor Company (HMC) began in 1968 as a complete knock down (CKD) assembler under an agreement with the Ford Motor Company. In 1976, HMC produced its ? rst originally-designed model, the Pony, using a low cost strategy with more than than 90 per cent of its parts cosmos sourced locally. Other smart models followed and HMC entered the US market in 1986 with the competitively low-priced Excel. During the late 1980s, however, the international auto industry experienced huge restructuring due to oversupply, excessive production capacity and intense global competition (see Womack et al. 1990). This gave rise to a number of strategic alliances between various auto companies via mergers and business partnerships. These were initiated to achieve economies of scale and to invoke the enlarged companies competitive positions in the international auto market. This was one reason whey HMC formed a strategic alliance with Mitsubishi in Canada. Studies of the Korean chaebol have tended to describe them as having similar characteristics to the zaibatsu in pre Second World War Japan large, diversi? ed, normally family-owned and managed conglomerates (Amsden, 1989).The Japanese colonization of Korea, which lasted from the early 1900s to the end of the Second World War, resulted in the establishment of a number of institutions and practices derived from Japan and which in? uenced the way in which companies were developed and managed. The chaebol, like the zaibatsu, have used a variety of path to shelter encounterer identi? cation with and dependence on the company (Janelli & Yim, 1993). Hyundai, for example, used the residence hall system (originally established by Japanese enterprises in the textile industry) to sanction close supervision and take for over predominantly young workers (Cho, 1999).This was come with by hiring and training schemes as well as paternalistic offbeat systems to foster dependency among the workers. Most chaebol withal used the moral thought process of the founder to elicit worker compliance by promoting the concept that the good of the nation was based on the companys performance. The founder of Hyundai, Chung Ju-Yung, on a regular basis exhorted his employees to embrace the Hyundai spirit. Independent unitings were not tolerated and were banned by the government until the late 1980s (Kearney, 1991).Yet worker dissatisfaction with both the paternalism of the chaebol and authoritarianism of the state in stages built up to breaking point and contri neverthelessed 136 R. D. Lansbury et al. to major industrial disputes and po lite unrest resulting in the democratization of Korea in 1987 (Choi, 1989 Ogle, 1990). Development of employment relations policies and practices at HMC were inexpugnablely in? uenced by the business partnership with the Mitsubishi Motor Company (MMC) which involved not only technical cooperation yet in any case management outgrowth. MMC was actively involved in the design of the ? st full automobile manufacturing systems at HMC. MMC made a strategic enthronisation in HMC constitute to 10 per cent of HMCs total capitalization. MMC also entered into an set upd scientific cooperation agreement to supply various parts such as engines, axles and condition components. The ? rst model which HMC developed was based on the Mitsubishi Lancer. Elements of MMCs system of labour management approach were utilized by HMC in order to enhance productivity and reduce production be. These included quality authorisation techniques and contemplate design which sought to more potently utili ze workers.Professional engineers became central to the supremacy of production operations and supervisors were given strict control over workers on the assembly-line. The human imagery policies practised by HMC during its formative stage bed dickens basic characteristics. First, a strict triplex labour market created a division between managerial and production workers. HMC applied different option criteria for each of these groups of employees. Second, a seniority system of promotion was developed in order to strengthen the hierarchal structure of the internal labour market and to educe short-term labour turnover. Years of service was an important criteria for net profit increases and promotion. As HMC expanded its production and hired more employees, however, it adopted what was termed an clean-cut Recruitment System (ORS) in an attempt to attract more university graduates and develop a professional management hierarchy. The ORS was also used to introduce more formal sys tems of recruitment for production workers which would enhance the quality of recruits to the production area. However, the soprano labour market system remained and was scour strengthened at heart HMC.Table 3 summarizes the criteria by which management and production employees were recruited. However, HMC argued that their approach to recruitment was transformed from one which relied on personal contracts or connections to one which was based on purpose selection criteria. As Kwon and ODonnell (1999 2000) have shown, workers in HMC appeared to be more compliant than those in other parts of the Hyundai group until the mid 1980s. mathematical function of the explanation may be the relatively secure employment conditions Table 3. Recruitment practices at the Hyundai Motor Company during the 1990s Management employeesResponsibility range Groups Assessment Process Production employees Group planning of? ce University graduates indite exam (e. g. language skills) University degree Interviews by senior management and military unit management Personnel surgical incision at plant take aim superior School leavers Test for relevant skills High School results Interviews by department head and personnel staff Globalization & Employment in Korea 137 at HMC, although approximately have argued that HMC workers witnessed the failure of strikes elsewhere and were more acquiescent about their conditions of employment (Bae, 1987).Furthermore, management in HMC and the Hyundai Heavy Industry group also used various means to oppose the rise of an independent coalition movement, including physical violence, intimidation and the establishment of complaint in company junctures. However, future(a) reforms to labour legislation in the 1990s, HMC was forced to negotiate with unions over presentoff and conditions. The HMC trade union also became a central force in the formation of the KCTU as the national peak council for the independent trade union movement.One of the m ain policy responses by HMC to the emergence of a more private-enterprise(a) work force and trade union movement during the 1980s was the implementation of an extensive wellbeing system. Welfare expenditure by HMC change magnitude from 286 billion won in 1986 to 857 billion won in 1990. Welfare bene? ts which had been limited to management were extended to production workers in the late 1980s. Various cultural programmes were nonionized in conjunction with training programmes and other activities in an attempt to build a unitarist philosophy of loyalty to the ? m and reduce the anti-management sentiments of many workers. Unions made the improvement of welfare systems a major bargaining issue, particularly in the context of an inadequate state welfare system in Korea. The unions achieved the establishment of tiet project aggroups with management to oversee a range of welfare programmes, such as the Employee Housing Construction Implementation charge to build houses for workers . Scholarships were also obtained for children of workers by the unions in negotiation with management. stipend were the survey of brisk negotiation between unions and management rom the late 1980s onwards. Wages at HMC increased by 20 per cent in 1987, 30 per cent in 1988 and 28 per cent in 1989 compared with only 6 per cent between 1982 and 1986. It was not only the amount of recompense which were the subject of bargaining with the unions unless also the betroth structure at HMC. As shown in Table 4, the unions achieved increased allowances, bonuses and superannuation paid by HMC to its members. Hence unions were able to broaden the range of issues for negotiation with HMC from the late1980s and made considerable gains during the 1990s.In term of the broad range of human resource policies and practices, however, HMC has continued to use various means in an effort to promote a convergence Table 4. The structure of remuneration at the Hyundai Motor Company during the 1990s Ty pes of pay Components Monthly profitss Normal ? xed wage Other ? xed and variable allowances Performance-based pay Productivity- link up pay Bonuses Superannuation Value-added remuneration Other forms of remuneration 138 R. D. Lansbury et al. Table 5. Comparison between employment relations practices adopted by the Hyundai Motor Company in the three plants in Korea, Canada and IndiaHuman resource policies and practices Korea Canada India Selection of employees based on performance-related criteria Training programmes which reinforce company norms such as loyalty and police squad spirit Employee involvement in around aspects of decision-making at plant level Industrial relations Successful subdueance of joint agreements with unions Flexible wages system linked to productivity and/or performance criteria interior labor movement Market Arrangements High post differentiation between workers and managers at plant level Opportunities for promotion from the shop ? or to higher lev el positions inwardly the plant Yes Yes Yes Yes No Yes No Yes No No No Yes No Yes Yes Yes No Yes No Yes No of interests between employees and management, while seeking to substantiate control and authority over the custody. The HMC union has been able to turn down some(a) of the managements initiatives to change wages and working conditions, but HMC continues to control the basis on which selection and training of employees is conducted and there is still a strong degree of status differentiation between management and manpower. This is re? cted in large differences between wages, bene? ts and conditions of work between HMC employees at the shop ? oor level compared with those in the ranks of management. Some key employment relations practices are set out in Table 5 and a equality is made between those that prevail in Korea compared with plants in Canada and India. Hyundais follow through in Canada In cooperation with Mitsubishi, HMC opened its ? rst overseas plant in Quebec, Canada, in 1985, in order to assemble the medium-sized front wheel drive Sonata model. The accusing was to pro? from HMCs initial success in Canada in 1984, with the Pony, when HMC became the largest auto importer in the country. Sales to Canada accounted for 30 per cent of HMCs total production that year. By establishing a presence in North America, HMC sought to acclivity its sales and avoid the imposition of import quotas. HMC acquired a 400 acre green? eld site near the Canadian town of Bromont in Quebec for the attribute payment of one Canadian dollar and received $Canadian cx million in grants from the Canadian federal and provincial governments as part of HMCs total investment of $Canadian 325 million.In addition, the Quebec Department of tote gave a $Canadian 7. 3 million grant to HMC to assist with training the workforce over a three year period. HMC built both a paint and a press shop to increase North American content (an important criterion for exporting to the USA ) as well as because of problems in gaining components from Korea due to labour problems Globalization & Employment in Korea 139 and strikes at HMCs Ulsan plant. Yet, when the plant was ? ally closed in 1993, one of the major contributing performers was ascribed to HMCs failure to manage successfully relations with its Canadian managers and employees (Teal, 1995). An analysis of HMCs experience in Canada offers some useful insights into the way in which the company sought to manage its workforce in North America. This is examined in consider to cardinal key areas human resource and industrial relations policies and practices. The data on which the account Hyundais experience in Canada is based is from a study of the Quebec plant by Teal (1995).More study was collected from HMC employees who had worked in the Canadian plant. Human Resource Policies and Practices The hiring policy of HMC in Canada was based on selecting employees who would identify with the company and its objecti ves. The selection process was long and complex, with candidates spending four days being interviewed, tested for hand kernel coordination and subjected to personality tests. The key selection criteria for prospective employees were that they would be allow foring and able to do repetitive, monotonous work on an assembly line, as well as work in a team.The company explicitly sought younger workers, around 22 years of age, with little or no experience in the auto industry. Hyundai sought to socialize new employees in a way that promoted identi? cation with the company. All production workers were called technicians and each employee was referred to as a member. All company employees wore the same uniform, irrespective of whether they were managers or shop-? oor workers. on that point was one cafeteria and one parking lot for all Hyundai employees. on that point was a wide range of sports and leisure activities designed to build team spirit and company value orientation among all employees. The training programmes for new employees emphasized loyalty, motivation and team spirit. Some employees were sent to Hyundais production centre in Ulsan, South Korea. However, the organization of team work in the Quebec plant was different from Ulsan. The work teams in Canada were less hierarchical and authoritarian than in Korea, team members were support to discuss any problems and there appeared to be greater job rotary motion at heart the teams.There was also a Direct Communication System in the Quebec plant which was not present in Ulsan. Each team elected its own representative to a departmental deputation. Team representatives from each department met regularly, with management playing an observer role at most meetings. There was also a health and safety committee to which workers elected their own representatives. During 1991 there were more than 50 meetings of Direct Communication committees at which more than 400 topics were discussed. Yet management found it dif? ult to satisfy the demands and expectations among employees. In 1991 there were nearly 160 complaints by workers concerning health and safety issues, of which only 100 were resolved. Industrial Relations A major concern of HMC was to avoid unionization of the plant in Quebec. The Canadian Auto Workers Union (CAWU) addicted considerable organisational 140 R. D. Lansbury et al. and ? nancial resources to attempting to organize the plant, without success, although by the time the plant closed in 1993, the union claimed to have achieved a growing level of support among the workforce.While much of the emphasis by Hyundai management was on more subtle means of union avoidance, by developing strong identi? cation of workers with the company, a number of employees who were thought to be sympathetic to or organizing on behalf of the union were suspended, transferred or dismissed. The union brought cases of so-called unfair dismissal before the Quebec establishment effort Commis sion and was successful in achieving an out-of-court settlement for a worker who had been dismissed in 1990.However, the union did not succeed in gaining a collective bargaining agreement to cover workers at the site. One of the devices used to prevent unionization of the plant was the formation of a pro-company, anti-union committee among the employees called the close Majority. It was formed in 1991 to dissuade employees from joining the union. The committee distributed pamphlets which alleged that if the plant became unionized, workers would lose money in union dues and their jobs would be insecure.The committee claimed that while workers were being laid off in other Canadian plants, which were unionized, Hyundai had hired new employees, opened a press shop and provided a high degree of job security. It also charged that the union was more concerned with protecting the jobs of workers in the big three auto plants in Ontario where it had a large membership, rather than at the Hyu ndai plant. But faced with the dispirited economic climate in Quebec and the spoil sales of the Hyundai Sonata in Canada and the USA, Hyundai introduced a reduced work week for all employees and ? ally shut the plant in September 1993. Internal Labour Market Arrangements Distinctions between managerial and production workers were minimized in price of status differentials within the plant (such as dining facilities), and workers were encouraged to put down in decision-making at the level of team or work group. Yet the work itself remained organized on Taylorist principles, with a strong division of tasks and cables between various job functions. Workers complained that even though they were supposed to be involved in a team-based approach to management, they were subject to speed-up and work intensi? ation without consultation. They also claimed that Hyundai actively discouraged union membership by workers and refused to engage in collective bargaining. Hence, employee involve ment in decision-making was exceedingly restricted and had little impact on the internal labour market arrangements. Yet there existed greater opportunities for promotion of workers in production and other functions to higher level positions in the Canadian plant compared with similar plants in Korea and India. Experience of Hyundai Motor Company in IndiaIn 1996, ? ve years after the closure of the Quebec plant, HMC established a 100 per cent owned subsidiary, the Hyundai Motor Company of India (HMI), Globalization & Employment in Korea 141 to manufacture cars in India. It represented an investment of more than US$ 450 million. Construction of a plant with the capacity to produce 120,000 passenger cars per year was completed in Chennai, Southern India, in 1999. By May 2000, the Chennai plant was producing 100,000 vehicles a year and had captured 14 per cent of the Indian market.HMI produced 2 models in Chennai Santro (999 cc) and Accent (1,499 cc), both of which achieved approxima tely one get of their respective market segments during the ? rst four months of 2000. HMI began its operation in Chennai with a workforce of 1,400 operating in a one shift production system in October 1998. By January 2001, the workforce had increased to 3,000 workers and a three-shift operation. It had become one of the fastest growing auto manufacturers in India and shared the lead with Ford of India in its respective market segments. It is dif? ult to make a direct comparison between Chennai and the Quebec plant as Chennai was larger and produced two models sooner of one. Nevertheless, HMI followed some policies similar to both the Korean and Canadian plants and also apply HR policies and practices which emphasized selection procedures and training programmes designed to ensure that new employees are strongly integrated with the organization. However, due to lower labour be in India, there was more reliance on labour-intensive methods and less use of automation than in Canad a or Korean plants.Given the lower levels of training and skill among the Indian workforce, compared with Korea or Canada, there was a much greater presence of Korean managers and technical advisers in Chennai, particularly during the ? rst year of operation. The lines of demarcation between different segments of the workforce were also greater in the Indian plant and there was a more hierarchical structure in the Indian company. Some of these practices re? ected local norms in Indian work culture and industry.The experience of the Hyundai Motor Company in India is analysed with regard to three areas human resource policies and practices, industrial relations and the internal labour market arrangements. Human Resource Policies and Practices HMI used a variety of HR policies and procedures to get hold the attitudes of its employees with the corporate culture. Training programmes within HMI re? ected the paternalistic nature within the company and emphasized the development of a str ong work ethic among the employees. New recruits were given two-day basic orientation training before being allocated to a speci? c department.Most of the initial work skills are taught on the production line. There followed a job rotation programme which exposed workers to other parts of the plant operations. As Chennai is a mass production plant, most of the jobs were fragmented into relatively simple, repetitive tasks and there was a highly expand division of labour. Much of the training beyond basic skills development was used to promote employee loyalty and develop harmony at the study in order to avoid internal con? ict. Workers were also encouraged to participate in productivity campaigns, employee suggestion schemes and quality control systems.There was a supervisory program Development Programme to enhance the skills of ? rst line managers. At executive director level, there was a Management Development Programme to improve 142 R. D. Lansbury et al. the capacity of manag ers to infer strategically, manage their time effectively and improve work methods and quality. The absolute majority of workers at the Chennai plant were employed at trainee level for the ? rst three years and it was expect that some of these would leave the company after three years (when the traineeship ended) in search of better wages and conditions.By maintaining high turnover at this level, HMI could handle wages down and retain a group of low-paid trainees who were not permitted to join unions and could provide a buffer should demand fall and the workforce command to be quickly reduced. In effect, the trainee position was a de facto short-term contract job, although some workers did receive promotion at the end of the trainee period. Nevertheless, promotion procedures were dim and were aimed at cost minimization, although employees with exceptional performance could receive rapid promotion.In general, it could take up to 20 years or more for production workers to rise to the highest level in their employment structure. There was a system of performance estimation which varied according to the level of the position. When applied to the non-executive groups the emphasis of the appraisal system was on behavioural criteria such as discipline, attitudes to work, cooperation, punctuality and attendance. The system led to some con? icts between production workers and management, although it was supposed to enhance competition between workers to achieve the highest performance ratings.Wages policy was the most hypercritical factor in enabling HMI to achieve a cost effective approach to labour management. HMIs goal was to minimize labour costs while providing management with considerable ? exibility to link allowances to productivity improvements. The total wage package comprised four key elements a base level amount, a cost of living component, house rental allowance, a ? exibility allowance and a mixture of sundry other minor components (including trave l, childrens education, provident store etc. ).There was considerable variation in the ratio of different components depending on an individuals position in the hierarchy. Hence, the base component of total salary varied from 60 per cent for managers to 30 per cent for production workers. According to HMI, this system helped to promote employee loyalty to the company. The wages of HMI employees were adjusted per year through increments paid in April and the wage structure was reviewed every three years. During 2000, HMI came under pressure from its workforce to increase wages, and a 20 per cent increase was granted to trainees and junior technicians.The wage levels for trainees and junior technical employees at HMI compared favourably with other multinational auto companies in the same area, but were superior to Indian companies in the auto components sector. However, by having the vast majority of their employees at trainee level, HMI was able to contain its wage costs. The wages and salaries differentials between executive and non-executive employees remained fairly constant over the ? rst few years of HMIs operation in Chennai, with executives receiving approximately six times that of production workers. However, it was dif? ult to gain accurate development about senior executive salaries paid by HMI. Anecdotal evidence from HMI and other automobile producers in India suggested that the foreign-owned companies shared information about wage Globalization & Employment in Korea 143 levels and generally maintain comparability so that they were not competing against each other in this regard. Hence, the variations between multinational auto companies operating within the Chennai area were minimal. However, there were signi? pretense wage differences between the component suppliers (mainly local Indian ? ms) and the foreign-owned assembly companies. Furthermore, wage levels in the Chennai area were generally lower than those in the northern industrial zones of India as they had been industrialized for less time and were still catching up to their northern counterparts. Industrial Relations HMI has been strongly in? uenced by the experience of HMC in Korea. From the mid 1980s, with the emergence of militant unionism, HMC experienced considerable industrial con? ict at its plants in Korea. There was a great push-down storage of external intervention in an attempt to resolve con? cts at HMC, with varying degrees of success. Experience in Korea conditioned attitudes among the senior managers at HMI. One of the principal reasons why HMC chose to locate its plants near Chennai in the south of India, was that unions were not as well organized as in some other parts of India. The trade union movement is well established in India and is closely linked with socialist politics. The Indian Industrial Relations sham provides a range of rights for workers and unions. The Act guarantees freedom of association and allows for multiple unions in workp laces.It also seeks to facilitate third party intervention in the workplace to resolve industrial disputes. In 2000, trade unions were organized in 24 of the 28 major car manufacturers in India, although not in foreign-owned or vocalize ventures, including Ford, Volvo, Toyota and HMI. There were two major strikes in the auto sector during the late 1990s. One was a strike over wages and compensation issues at the Ascot-Faridabad plant and lasted 70 days. The other was at Hindustan Motors over manufactory conditions and wages and was 30 days in duration (Bhaktavatsala, 1992). During the ? st two years of HMIs operations in India, there were no successful organizing efforts by unions or industrial disputes at the Chennai plant. Yet, as the plant became more established and HMIs market share and pro? tability increased, production workers increasingly raised complaints about labour intensi? cation, low wages and limited opportunities for promotion. However, as the trainee workers co mprise half of the workforce at HMI, and were not permitted to join a union or participate in industrial disputes, HMI management was able to resist union pressures.Another source of tension within the Chennai plant occurred between Korean managers dispatched to India from HMC in Korea, and local Indian management. An important contributing factor related to the management style displayed by some of the Koreans which the Indians felt was unsympathetic to prevailing customs and practices in India. They complained that their Korean counterparts frequently communicated with each other in the Korean language which excluded Indians from the decision-making process.For their part, a number of Korean managers claimed that the Indians lacked a strong work ethic and therefore had to be more strictly superintend in order to achieve the required levels of productivity. 144 R. D. Lansbury et al. The Koreans also argued that the rank system interfered with the ef? cient operation of the plant because some Indian workers were appointed by Indian managers to positions in accordance with their caste position rather than on the basis of merit. The Indian management system was regarded as unduly paternalistic by some of the Korean managers.HMI established a Works Committee, with the objective of resolving con? icts and differences at the workplace without involving unions. The works committee comprised rival representation from both management and production workers. The Committee met monthly and provided a forum in which disagreements over wages and conditions could be discussed and resolved. However, in the absence seizure of a trade union, employees had little bargaining power in regard to management and the Committee had no means of enforcing its decisions. HMI management tended to use the Committee as a means for disseminating its policies among the workforce.The Committee did not have any jurisdiction to set wages or working conditions. While HMI has remained union-fre e and had not experienced any major industrial dispute, strikes occurred among component suppliers which were Korean joint ventures with HMI, including Donghee, Pyungbuang, Hwasung and Samrib. The disputes concerned wages, job security and welfare issues. The strikes had adverse effects on HMIs production ef? ciency as many of the companies had a monopoly supplier consanguinity with HMI. The resolution of these disputes often required direct intervention by HMI. Internal Labour Market ArrangementsFrom the initial establishment of the Chennai plant, HMI adopted a dual internal labour market, which differentiated between managerial and production employees in relation to wages, promotion and welfare facilities. Initially, there were two classes of employees executive and non-executive. In the executive group there were 11 categories while in the non-executive group there were 14 positions. Within the ? rst year of production, however, the total number of employees increased from 1,50 3 to 2,320 and there was pressure from the workforce to provide greater wage differentials based on quali? ations. Accordingly, the number of categories in the non-executive ranks was increased from 14 to 18 and two new classi? cations of junior engineer were introduced. The expansion in the number of layers within the non-executive group reduced some of the discontent about the limited status differentials in the organizational hierarchy. However, HMI placed restrictions on the number of promotions of workers to higher level categories. This is an important factor in the management of labour within the plant because, as mentioned previously, trainees have only temporary employment status for the ? st three years and are not permitted to join unions. Hence, their opportunities to gain advancement are limited. During the ? rst year of operation, almost all senior decision-making positions at HMI were held by Koreans dispatched from HMC. The Korean managers not only were heads of divi sion, with responsibility for all key activities in HMI, but also some were placed at operational level to provide support and advice to middle level Indian managers and to coordinate management activities.As the number Globalization & Employment in Korea 145 of total employees increased during the ? rst two years of operation, the ratio of Koreans to Indians in the plant changed from 119 to 146. However, most key roles remained under the control of Koreans. In the production division, the ratio of Koreans to Indians underwent more signi? cant change, from a ratio of 126 in 1998 to 1172 in 2000. This was in keeping with HMIs policy of becoming less reliant on Korean managers at plant level. DiscussionThe comparison of HMCs operations in three countries demonstrates that there are complex interactions between globalization pressures towards a uniform approach to employment relations across various countries and divergent tendencies at the local level in each country. Although HMC sou ght to carefully select employers at its plant in Canada who would identify with the companys objectives and follow its procedures, the Canadian workers were willing to argufy management decisions and to exercise their rights on issues such as health and safety.This was patronage the fact that the Canadian Auto Workers Union was unsuccessful in gaining collective bargaining coverage of the Bromont plant. Although HMC were able to remain non-union, they had a divided workforce and were not able to implement the full range of Hyundai-style human resource policies and practices as planned. Although the closure of the Canadian operation was primarily due to disappointing sales of the Sonata model, poor employee relations were also a contributing factor to Hyundais failure in Canada.The Indian operations marked an important attempt by Hyundai to relaunch its globalization strategy and demonstrate that it could successfully manufacture and sell overseas-made Hyundai vehicles outside Kore a. The employee relations practices which Hyundai implemented in India were more like traditional Korean approaches and appeared to represent a retreat from some of the more progressive ideas which were attempted in Canada such as a ? atter hierarchical structure and greater employee participation in decision-making (albeit limited in scope).But the Indian plant was more labour intensive and had lower labour costs, which is similar to the earlier stages of auto production in Korea. Unlike the current piazza in Korea, where HMC is required to negotiate with the union movement (due to both its organizational strength and changes in legislation), Hyundai has so far been able to avoid unionization in India. It remains to be seen whether the widespread nature of unionization in the Indian auto industry and political pressures in India may force Hyundai to abandon its policy of union avoidance.An alternative strategy, pursued by some other foreign auto companies in India has been to rec ognize or foster enterprise unions, which may be more cooperative than industry-wide unions. Implications As has been noted in other studies of auto companies, which established transplants outside their home country, there is a strong tendency towards hybridization both in terms of production methods as well as employment relations. This has been observed in the case of Japanese companies which have 146 R. D. Lansbury et al. established plants in the joined States (see Cutcher-Gershenfeld et al. 1998), but it has also occurred with US auto companies in Canada (Lewchuck et al. , 2001) and European auto companies which have opened plants in other parts of the world (see Boyer et al. , 1998). It would appear, from the current study, that a similar tendency is occurring within the Hyundai Motor Company as they seek to re-start their overseas production activities in India. A more diversi? ed employee relations strategy, which takes into account the demands of local employees and their unions, may be required if Hyundai is to continue to develop an effective global production system.For its global ambitions to be realized, Hyundai will require a much greater proportion of its manufacturing to be undertaken outside Korea, the development of global supply chains and global coordination of production, marketing and technology development. The experience of Hyundai in Canada and India suggests that employee relations are likely to be an evolving blend of company-speci? c policies and locally-based practices, depending on the context in which Hyundai is operating. ConclusionsThe experience of the Hyundai Motor Company in India illustrates the complexity of the impact of globalization strategies on employment relations. It supports the hypothesis that there are dynamic interactions between global and local forces, which shape employment relations when a multinational enterprise establishes a production eagerness in a country outside its home base. Hyundai has applied s ome of its human resources policies from Korea to India, such as training programmes to reinforce employee loyalty to the company, but it has provided fewer opportunities for employees to be promoted from the shop ? or to higher-level positions within the plant. This has caused resentment among some of the Indian employees who feel that they have limited career prospects in the company. Hyundai has also successfully avoided unionization despite the fact that unions have collective agreements with most local automobile producers in India. It remains to be seen whether the Indian unions will be able to apply pressure successfully to the company to bargain collectively or persuade the government to require Hyundai to negotiate with the union over the wages and conditions of its employees.Acknowledgements The authors wish to acknowledge the Australian Research Council (ARC) for their acquaint of an ARC Discovery Grant for this research project and the helpful comments of the reviewers and editors. References Amsden, A. (1989) Asias Next Giant South Korea and Late industrialization (New York Oxford University Press). Bae, K. H. (1987) Automobile Workers in Korea (Seoul Seoul National University Press). Bhaktavatsala, R. C. (1992) The Indian automobile industry patterns of expansion, entry and performance, Management, diary, 5(2), pp. 7 111. Globalization & Employment in Korea 147 Boyer, R. (1998) Hybridization and models of production Geography, history and theory, in R. Boyer, E. Cherron, U. Jurgens & S. 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