Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
GM Korea’s union on verge of strike as carmaker bears nearly all tariff burden
GM Korea's Chevrolet Trax Crossover / Courtesy of GM Korea
By Lee Min-hyung
Labor tensions spread across major Korean companies
GM Korea CEO Hector Villarreal / Courtesy of GM Korea
GM Korea’s labor union is on the verge of a strike after wage negotiations reached an impasse, with tensions exacerbated by the automaker’s decision to shoulder the vast majority of the cost from U.S. auto tariffs that have weighed heavily on its earnings last year.
The carmaker’s labor union has moved closer to the labor action, after an overwhelming majority of members voted in favor of a strike.
The status quo is feared to worsen the carmaker’s already deteriorating financial performance amid mounting tariff-related costs. Korean automakers, including GM Korea, face an auto tariff of 15 percent when exporting vehicles to the United States.
Some 86.5 percent of GM Korea’s union members favored the walkout last week. The carmaker’s union and management had held nine rounds of wage negotiations, but failed to find a breakthrough.
The conflict between the two sides escalated after it turned out that GM Korea did not share its tariff burden with its U.S. headquarters, instead taking on the full burden.
The union argued that the tariff-related costs should be shared with headquarters, so that management also takes responsibility for the firm’s worsening earnings.
GM Korea reported operating profits of 489.8 billion won ($316 million) last year, down 64 percent from 1.36 trillion won a year earlier. A substantial portion of the decline is attributable to the U.S. tariff, which has also reduced the firm’s possibility for future investments, including facility upgrades and new vehicle development.
GM Korea's Chevrolet Colorado pickup truck / Courtesy of GM Korea
The union is seeking a monthly base salary increase of 149,600 won, performance bonuses averaging 30 million won per employee, an extension of the retirement age, additional hiring and new vehicle allocations for domestic production facilities.
The proposed bonus package is based on 10 percent of the company’s sales and 15 percent of operating profits.
A strike would pose a particularly serious risk for GM Korea, given its heavy reliance on exports.
The company’s Chevrolet Trax Crossover and Trailblazer crossover models account for a substantial share of production destined for overseas markets, particularly to the U.S.
Any disruption to output could affect global vehicle allocations, damage profitability and weaken the competitiveness of GM Korea’s manufacturing operations.
The dispute also comes as labor tensions are rising across Korea’s automotive industry. Earlier this week, the labor mediation committee suspended arbitration in wage negotiations between Hyundai Motor’s union and management, granting its union the legal right to strike if further talks fail.
Industry officials said that the current conflicts extend beyond annual wage bargaining. Automakers worldwide are navigating a complex transition toward electrification, automation and software-defined vehicles, forcing companies to pursue greater efficiency, while labor unions seek to safeguard employment and long-term job security.
“If Hyundai Motor’s union decides to go on a strike, the chances for GM Korea’s unionized workers to follow in their footsteps will increase,” an official from the auto industry said.
Similar conflicts are unfolding elsewhere.
Labor unions at HD Hyundai Heavy Industries, LG Uplus, Kakao and Shinsegae have stepped up pressure on management in recent weeks, seeking higher wages, larger performance-based bonuses and improved working conditions.
Kakao's union is scheduled to stage a second strike Monday after negotiations over compensation stalled, while workers at HD Hyundai Heavy Industries have also been pushing for improved pay and benefits during this year's collective bargaining process.
The growing number of labor disputes has raised concerns among industry officials, who warn that strikes at major manufacturers and service-sector companies could add to economic uncertainty at a time when businesses are already grappling with slowing growth, trade risks and rising costs.