Internal and External Crises at Korea GM, Attention on 2nd Provisional Agreement Vote

Labor and Management at a Crossroads... Can They Unite Amid Various External Challenges Including the Auto Semiconductor Supply Shortage?

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Despite the strong performance of the best-selling Chevrolet Trailblazer, Korea GM is struggling with internal and external challenges such as difficulties in wage and collective bargaining negotiations, supply shortages of automotive semiconductors, and electric vehicle recalls. Industry insiders are paying close attention to whether Korea GM’s labor and management can minimize risks by reaching an agreement on wage and collective bargaining before the Chuseok holiday amid these challenges.

According to the industry on the 23rd, the Korea GM labor union began absentee voting this morning and will conduct a second round of approval voting over two days on the tentative agreement for the 2021 wage and collective bargaining. Previously, after the first tentative agreement vote held on the 22nd of last month was rejected, labor and management negotiated to produce a new agreement.

The new agreement maintains the main framework of the first agreement, including ▲a 30,000 KRW increase in base pay (including seniority increments) ▲a 4.5 million KRW incentive bonus, but adds ▲200,000 KRW in traditional market gift certificates and ▲300,000 KRW in maintenance coupons for company-brand vehicles. Additionally, the timing of the incentive payment was moved forward, with 4 million KRW to be paid immediately upon agreement and 500,000 KRW to be paid by December 31 of this year.

The industry and Korea GM labor and management are focusing on this second approval vote of the tentative agreement because Korea GM’s internal and external conditions are unfavorable. Although the main model, the compact SUV Chevrolet Trailblazer, has been successful, uncontrollable external adversities are intensifying.

A representative issue is the supply shortage of automotive semiconductors, which caused production disruptions of 80,000 units in the first half of the year alone. Korea GM is facing renewed semiconductor supply difficulties, which will lead to production disruptions starting next month. While the Changwon plant producing the Spark will maintain 100% production, the Bupyeong 1 and 2 plants will enter a 50% reduced production system. Particularly painful is the production cut at Bupyeong Plant 1, which produces the Trailblazer, a key model for business normalization.

Although not a directly produced model, negative developments have also occurred in the electric vehicle (EV) sector. General Motors (GM) has decided to implement a global recall for all models of the electric Bolt EV and Bolt EUV. This is an embarrassing situation for Korea GM, which only five days ago, on the 18th, began pre-orders for the new Bolt EV and Bolt EUV, marking a full-scale push into the EV market.

If this tentative agreement vote fails, the labor-management conflict at Korea GM is likely to be prolonged. The Korea GM union has already obtained legal strike rights, and with leadership elections scheduled at the end of the year, the situation is tense. Korea GM, which has suffered losses for seven consecutive years and is currently experiencing production disruptions due to semiconductor shortages, also finds it difficult to propose a progressive plan.

A Korea GM official stated, "We initially aimed to reach the break-even point within the year, but the ongoing semiconductor supply shortage has made this goal distant," adding, "While the outlook is not entirely bleak at present, the repercussions of a rejection would be significant."

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