GM accelerates brinkmanship tactic
US car giant accused of threatening gov’t
By Kang Seung-woo
Threats and bluffs are arguably two of the major strategic arms of U.S. President Donald Trump, who is good at getting concessions by pressing his negotiating partners to back off.
Observers pointed out Wednesday that General Motors (GM) may have benchmarked the U.S. president by trying to force the government to concede. The two sides have asked each other for plans to get money-losing GM Korea back on track.
GM abruptly announced Tuesday it will close its Gunsan factory in North Jeolla Province in May, saying it will decide soon on the remaining three factories. The step came just a day after the country’s industry minister required the U.S. car giant to present a self-rescue plan before requesting support from taxpayers’ money.
“GM has sent a tough message to the administration about the possibility of a total pullout in a pre-emptive way. If GM really thinks of withdrawing from the country, it is threatening that now. If not, it is bluffing to get some support from the government,” said Kim Pil-soo, a professor at Daelim University.
“Whichever is correct, what GM is demonstrating is a well-designed negotiation technique, which is comparable to what Trump would do.”
Of note is that Trump immediately hailed the move himself.
“GM Korea announced today that it will cease production and close its Gunsan plant in May of 2018, and they’re going to move back to Detroit,” Trump said at a White House meeting.
“You don’t hear these things, except for the fact that Trump became president. Believe me, you wouldn’t be hearing that. So they’re moving back from Korea to Detroit. They’re moving.”
A government official said GM is making the maneuver at a very sensitive time.
“Korea is scheduled to have elections in June to select governors and mayors. GM made public it will close the Gunsan plant just a month ahead of the nationwide elections,” said the official who asked not to be named.
“All politicians and bureaucrats have no choice but to pay attention to the issue since at least 200,000 jobs will disappear if GM leaves Korea. GM is pressing the whole country in a very effective fashion.”
Another factor is the militant union of GM Korea, which has demanded bonuses despite big operating losses amounting to billions of dollars over the past few years.
The union has vowed to stage an all-out struggle against the Detroit-based carmaker.
“Why should just workers shoulder the responsibility for all the deficits, which are caused by management? The financial status of GM Korea is miserable because the U.S. head office took funds from GM Korea in such forms as a high interest rate,” a GM Korea union member said.
Against this backdrop, most analysts are also unsure about GM’s future measures for its Korean plants, which produce half a million vehicles every year.
“GM CEO Mary Barra has downsized its conventional operations in India, Russia and Europe over the past years while focusing on the United States and China,” said Cho Soo-hong, an analyst at NH Investment and Securities.
“Along the same lines, the chief executive may want to shut down Korean factories all together. Otherwise, it may just want to get more concessions from the government. I really don’t know what GM’s top management wants.”