'Militant union jeopardizes GM Korea's future'

Union workers of GM Korea stage a sit-in at Gwanghwamum Square in central Seoul, March. 23, demanding the carmaker halt moves to shut down its Gunsan factory. / Courtesy of Korean Metal Worker's Union

By Jhoo Dong-chan

The management and union of GM Korea have failed to reach an agreement on reducing the carmaker's production costs.

The ailing carmaker's Detroit headquarters and the state-run Korean Development Bank (KDB) have long stressed that a union-management settlement is a precondition to salvage GM Korea.

CEO Kaher Kazem said earlier in an email to company workers that the carmaker's Detroit headquarters won't make an additional investment or allocate a new car model if they fail to reach an agreement on cost cutting by the end of March

“Union workers of GM Korea have persisted with unrealistic demands, inducing a stalemate in such a pivotal moment,” Daelim University automotives professor Kim Pil-soo said.

“The Moon Jae-in administration promoted itself as a job-creating government during the presidential election. They understand the government can't afford the withdrawal of GM from Korea, which would eventually lead to massive layoffs. They know the government will inject financial support into GM Korea anyway. Such a practice should stop now.”

According to the Korean Metal Workers' Union, the GM Korea union is demanding that workers from the company's Gunsan plant, which is scheduled for closure, be reassigned to its plants in Bupyeong and Changwon. It also wants the company to replace foreign executives with Koreans.

The union wants the sales of imported Chevrolet vehicles in Korea to be halted, and for the carmaker to give each worker 30 million won in shares if there is a debt for equity swap.

“Their demands are unrealistic considering the carmaker's situation,” said Kim.

“Not only should the militant union but also management be blamed for GM Korea's current situation. However, the basic framework of sharing the burden is a must in salvaging the company. Without it, Detroit won't allocate a new car model and will not extend its Korean operation's maturing debts.”

“The current situation is not favorable,” said a GM Korea official.

“If the situation continues, the company won't be able to pay 600 billion won for its voluntary retirement program next month. The labor-management settlement should be made immediately.”

Except for the company's union, other players who have stake in the company have closely worked together to salvage GM Korea.

According to automotive experts, Thursday, outside executives of GM and the KDB unanimously decided to delay calling the loan while lowering its interest rate.

"Their decision demonstrates that the KDB's due diligence of the carmaker is working out better than anticipated," said an industry observer.