Hyundai Steel steps up cost-saving measures amid US tariffs and competition

The company has cut executive salaries and is considering a voluntary resignation program for employees

South Korea’s Hyundai Steel, a subsidiary of automakers Hyundai Motor and Kia, has declared a state of emergency. The company is stepping up cost-saving measures amid US tariffs on steel and aluminum and declining profitability due to growing competition in the domestic market from Chinese and Japanese manufacturers, The KoreaTimes reports.

In particular, the company has cut executive salaries by 20% and is considering a voluntary resignation program for employees to save money.

Hyundai Steel explained that the decision was made after recognizing that the company would not be able to improve its performance without implementing strict internal measures, given the current business environment both at home and abroad.

These measures are the result of the company’s recent cost-saving efforts. For example, Hyundai Steel recently reduced operations at its second plant in Pohang due to the downturn in the domestic construction market.

The company has also been filing anti-dumping complaints with the relevant authorities against low-cost steel products from China and Japan that are grabbing its share of the local market.

In addition, a conflict with the labor union adds to the losses. Wage negotiations have been ongoing since last September, with disagreements mainly over issues such as performance bonuses.

The 25 percent US duty on steel products is also a serious problem for Hyundai Steel. Previously, South Korea’s annual duty-free import quota to the US was up to 2.63 million tons (agreed upon by the parties in 2018).

In February, Korea Investors Service predicted that domestic steel producers would face additional costs of up to $890 million if US duties were imposed. However, as the United States has also imposed duties on “derivative” products, this amount will be higher than expected.

In January, it was reported that Hyundai Steel was actively considering building a steel plant in the United States. The company is weighing investments in a facility in the southeastern United States that will use electric arc furnaces. The plans were announced against the backdrop of expectations regarding US tariffs.

Hyundai Motor and Kia produce cars at plants in Alabama and Georgia (USA), as well as in Monterey (Mexico). The new plant could potentially supply flat steel products to these North American operations.