GM union fears big layoffs

By Park Jin-hai

The GM Korea union claimed Wednesday that the firm is secretly planning to downsize its production facilities here, with hundreds of employees likely to be laid off.

The claim comes after reports that Global GM’s head of international operations Stefan Jacoby blamed increasing costs and labor disputes for damaging the Korean auto industry’s competitiveness at a meeting with the press at the Detroit Motor Show.

“The Alpheon model is coming in 2016, and Captiva in 2017, but no new production quota has yet been secured. If nothing is done, the No. 2 Buypeong Plant will be closed,” said Jang Kyung-dae, the union spokesman. “Not allocating a new production quota means that the plant cannot have future.”

This comes at a time when the company is trying to renovate its No.1 Bupyeong Plant so it can produce mid-sized cars that are now manufactured at Plant 2.

The No. 1 Plant, with about one thousand workers, has been producing compacts such as the Aveo and Trax, while the No. 2 Plant, with some 700 employees, has been producing the Malibu, Captiva and Alpheon.

Management says it intends to increase the productivity of its plants, but the union sees this as a signal of intent to combine the two plants into one.

Union leader Jeong Jong-hwan and three other union members have been staging a protest since Jan. 5. They say the company is trying to decrease production capacity from 480,000 by one third to 300,000.

Although Jacoby said GM is not considering a pullout from the Korean market, he warned that resetting the production quota for Korea is inevitable given current productivity and labor costs. GM decides on quotas based on the competitiveness of its 150 plants around the world.

GM Korea’s total production was 630,532 vehicles last year. The carmaker’s export total was 476,151, a drop of 24 percent or 153,327 from a year ago.

Danial Ammann, president of GM, said that in producing the same vehicle, Korea’s production costs are double that of India.

Sergio Rocha, GM Korea CEO, who accompanied Jacoby and Ammann, also said that due to the export slump last year, the company only secured 50,000 of a production quota for 2015, which is 100,000 less than last year’s output.

In 2013 the U.S. automaker decided to stop selling its Chevrolet-branded vehicles in Europe by the end of 2015, a move that hit output at its Korean unit, which produced most of the Chevy cars sold there.

The union will restart negotiations with management about the renovation of the No. 1 Bupyeong Plant when its CEO returns from the motor show, but an exact date for a meeting has not been decided on yet.