"‘Due to Korean Labor Union, May Go to China’... GM's Warning Is Not a Bluff"

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Already 80,000 Units of Production Disrupted This Year Due to COVID-19 and Labor Disputes
GM Has a Precedent of Withdrawing After Only Receiving Government Support in Australia
Industry Says "Only Provides Grounds for Withdrawal"... Partner Companies Plead for Resolution

[Asia Economy Reporter Kiho Sung] Speculation about Korea GM's withdrawal has resurfaced. The trigger was a warning from a senior executive of U.S. GM, who said that the Korea GM labor union, which repeatedly strikes over wage and collective bargaining agreement (CBA) negotiations, might "leave Korea." Industry insiders view Korea GM's deficits, labor-management risks, and conflicts such as lawsuits involving irregular workers as so acute that it would not be surprising if withdrawal were decided immediately. There are also concerns that prolonged labor disputes could only provide GM with grounds for withdrawal.

According to the automotive industry on the 19th, Steve Kiefer, U.S. GM Senior Vice President and Head of Overseas Operations, recently stated in an interview with a foreign media outlet, "The Korea GM union is holding vehicle production hostage and causing significant financial damage," adding, "GM also has plans to produce 5 million units annually in other Asian countries, including China." Vice President Kiefer oversees most GM plants worldwide except those in North America and China. Korea GM responded by emphasizing "labor-management harmony," drawing a line, but the industry interprets Kiefer's remarks as alluding to the 'Korea withdrawal speculation' that resurfaces whenever GM faces a crisis.

GM's management style of ruthlessly withdrawing when performance is poor also strengthens the Korea withdrawal speculation. Since 2013, GM has taken measures such as withdrawing the Chevrolet brand from Europe, closing plants in Australia, Thailand, and Indonesia, reducing production in Russia, and withdrawing the Chevrolet brand from South Africa. This year, GM closed plants in Ohio, Michigan, and Maryland in the U.S. and sold plants in India and Thailand.

Considering GM's performance-first management style, Korea GM cannot be complacent. Due to the union's partial strike continuing since the 30th of last month, Korea GM estimates that about 17,000 units of production have been disrupted so far. Furthermore, as the union extended the strike and refusal of overtime and special work until the 20th, this figure is expected to expand to 20,000 units. Already, due to the impact of the COVID-19 pandemic, about 60,000 units of production were disrupted in the first half of the year, making a seventh consecutive year of deficits highly likely.

After closing the Gunsan plant in 2018, GM decided to inject new funds into the remaining business and promised the Korea Development Bank (KDB) not to leave Korea for 10 years. However, GM has recently closed most overseas operations through its electric vehicle transition plan, and Korea GM recorded deficits of 614.9 billion KRW and 332.4 billion KRW in 2018 and last year, respectively, already exceeding the KDB's support fund of 810 billion KRW. Additionally, according to GM's third-quarter report, Korea GM faces paying $490 million (approximately 540 billion KRW) in compensation and additional costs due to various lawsuits, including the conversion of irregular workers to regular positions.

Because of this, some predict that if the union strike continues, GM may decide to leave Korea before fulfilling the 10-year commitment. Although the KDB can exercise a 'veto right,' it cannot prevent withdrawal if GM accepts the damages. In fact, GM received $1 billion in support from the Australian government on the condition of maintaining the plant for 10 years and received $275 million, but announced withdrawal plans in December 2013 and finally withdrew in October 2017, four years later.

The industry views the labor-management conflict at Korea GM as only providing GM with grounds for withdrawal. An industry insider said, "GM does not understand the Korea GM union, which repeatedly strikes over wages amid the COVID-19 situation," adding, "As global plants are being closed one after another, the possibility of withdrawal from Korea must also be considered."

Meanwhile, the Korea GM partner companies' association, 'Korea GM Cooperation Association,' held a picket protest in front of the Bupyeong plant from 6:20 a.m. to 8 a.m. today, distributing a 'plea for survival' to employees arriving for work. Through the plea, they stated, "Even now, partner companies are unable to pay electricity bills and employee wages on time," and urged, "There must be no further production disruptions from now on," calling for a swift resolution of the wage and collective bargaining agreement.

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