GM Korea faces growing uncertainties over labor dispute

GM Korea Bupyeong Plant 2 in Incheon / Hankook Ilbo photo by Ryu Jong-eun

By Nam Hyun-woo

GM Korea is again facing growing uncertainties over a labor dispute, as its union and management lock horns over wages and allocating new vehicles for assembly at its plant in Incheon.

The company's Bupyeong Plant 2 in Incheon is seeing a risk of idling as early as 2022, as GM has yet to allocate new vehicles for the plant to assemble after the production of the Malibu sedan and the Trax compact SUV end.

While the union is demanding a new vehicle for the plant as well as a wage hike, GM and GM Korea are apparently refusing to give it new vehicles, citing the plant's productivity and the global automotive industry downturn.

According to GM Korea and industry officials, labor and management on Thursday held the 16th round of negotiation on wages and collective bargaining for this year. The negotiations went into a deadlock as they fail to narrow their differences after management on Monday suggested a temporary production plan in which Bupyeong Plant 2 will not get any new vehicles to produce in the future.

According to the union, the management said “Bupyeong Plant 1 and Changwon Plant will each get two vehicles,” and the company will “extend the current production plan for Bupyeong Plant 2,” adding “there is a serious gap between the productivity of Bupyeong Plants 1 and 2.” Changwon Plant is located in South Gyeongsang Province.

Chevrolet Trax by GM Korea / Courtesy of GM Korea

Bupyeong Plant 2 was initially designed to produce midsize or large vehicles, but has been producing the Malibu and the Trax, as Plant 1 transferred those vehicles production to focus on the Trailblazer small SUV, a strategic model that was launched in January here and exported 80,000 as of last month.

If Plant 2 does not receive production volume after production of the Malibu and the Trax ends, fear is growing that the plant could shut down and more than 1,000 jobs could be cut there.

Though GM Korea refuses to talk about the issue, the headquarters appears to be hesitating in giving new vehicles to Plant 2, due to continuing labor disputes of GM Korea, weakened productivity of the plant, and the global automotive market downturn.

On Thursday, Korea's National Labor Relations Commission suspended its mediation of the dispute between GM Korea labor and management, which allows the union to launch strikes legitimately.

The union has already voted for labor actions, including strikes, with 80 percent of 7,778 members agreeing to launch actions in protest of the management's refusal to accept their demands of a 120,304 won hike in monthly salary and additional incentives worth more than 20 million won. GM Korea posted an operating loss of 332.4 billion won last year, extending its losing streak to the sixth consecutive year.

As part of the protest, the union stopped the manufacturing line of the Trax at Plant 2 for two days in August, turning down management's request to increase the production volume of the Trax from 28 vehicles per hour to 32. The Trax is winning a favorable response in the U.S., selling 22,466 in the second quarter of this year.

As the plant's productivity continues to face questions, GM Korea CEO Kaher Kazem reportedly said General Motors may shut down Korean plants if the current labor dispute continues.

In a Friday report, the Korea Economic Daily reported Kazem told an unnamed industry official that the current situation at GM Korea is “unimaginable in the perspective of the U.S. headquarters” and the union is taking GM's promise to not sell assets in Korea until 2028 as “a weapon” to ensure its demands are met.

In 2018, GM invested 830 billion won for GM Korea and promised the company will not sell assets here until 2028 in return for a state bailout on GM Korea. As part of the pledge, GM gave the Trailblazer production to Bupyeong Plant 1 and plans to assemble a crossover utility vehicle at its Changwon Plant next year.

“GM has already made investments into Korea as well as allocating two important vehicles for global sales to GM Korea plants,” a source familiar with the GM Korea issue said. “With GM suffering difficulties in the wake of the COVID-19 pandemic, allocating another vehicle to GM Korea, which suffers similar labor disputes every year, is a tough choice to make.”

Chevrolet Trailblazer / Courtesy of GM Korea