Korea GM "Concerns Over Production Disruption of 1,700 Units... Urgent Need for Labor-Management Cooperation"

Automotive Industry "Concerns Over Worsening Parts Sector Crisis Due to Delays in Labor-Management Negotiations"

Korea GM Bupyeong Plant (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] “We have great concerns about the union’s recent decision to strike, which has caused additional production disruptions of over 1,700 units following the 60,000 units lost due to the novel coronavirus disease (COVID-19).”

Korea GM appealed ahead of the 20th round of this year’s wage and collective bargaining agreement (CBA) negotiations scheduled for the 27th, stating, “We are experiencing severe management difficulties due to COVID-19 while supporting tens of thousands of jobs, including domestic suppliers.” They emphasized the urgency of reaching a CBA agreement to normalize management and urged the union’s active cooperation.

Previously, Korea GM labor and management held 19 meetings over about three months since their initial meeting on July 22. On the 21st, the company presented a comprehensive proposal including COVID-19 crisis bonuses and future plans for each plant, but the union opposed it and launched actions such as refusing overtime and special work. If negotiations break down by this meeting and a full strike materializes, production disruptions at all Korea GM plants?including Bupyeong 1 and 2 plants and Changwon plant?would exceed 1,600 units per day.

Korea GM’s unusual disclosure of the loss scale caused by the union’s strike reflects the urgent need to minimize production losses. Originally, Korea GM aimed to make this year a turning point for performance recovery, led by the global new model Trailblazer. Having reduced operating losses from 614.8 billion won in 2018 to 332.3 billion won in 2019, the company aspired to break even this year. However, the COVID-19 crisis that halted the global market in the first half has made achieving this goal uncertain.

Although exports and production have been on the rise in the second half, if unstable labor-management relations cause further setbacks, it will be even harder to recover first-half losses. Korea GM’s production, which fell to around 80,000 units in the first quarter, recovered to about 103,000 units in the third quarter. Thanks to the new model effect of the Trailblazer, U.S. sales turned positive from -46.6% in April to 6.1% in September compared to the previous year. Korea GM plans to offset first-half losses through stable production for the remainder of the year.

The industry is also expressing concern over Korea GM’s unstable labor-management relations. Global automakers, after the COVID-19 crisis, are facing survival challenges and are moving beyond existing restructuring plans to reduce workforce in consideration of future vehicle transitions. Additionally, delays in labor negotiations at automakers are expected to worsen liquidity crises for parts suppliers. According to the Korea Automobile Manufacturers Association, more than half of the 84 listed automotive parts companies recorded losses in the first half of this year.

Jung Man-ki, president of the Korea Automobile Manufacturers Association, said, “In a situation where everyone is struggling due to the spread of COVID-19, efforts to overcome the crisis at the industrial ecosystem level are urgently needed rather than small-group selfishness,” adding, “Compromise and determination are necessary to turn the recovery of major markets such as the U.S. into an opportunity for a turnaround.”

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