Unique: GM warns labor unrest making South Korea untenable

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Exclusive: GM warns labor unrest making South Korea untenable


DETROIT/SEOUL (Reuters) – Common Motors Co GM.N has issued its strongest warning but that persistent industrial unrest may drive it out of South Korea, simply two years after it acquired a state-backed rescue bundle to remain.

FILE PHOTO: Autos are assembled at an meeting line of GM Korea’s Bupyeong plant in Incheon, South Korea March 29, 2018. REUTERS/Kim Hong-Ji

GM staff have been staging two, four-hour strikes each day since Oct. 30 as they demand an finish to a wage freeze put in place after the 2018 deal that saved the Korean operations from chapter.

The strikes and different industrial motion have price the corporate 17,000 automobiles in misplaced manufacturing, a quantity that can hit 20,000 by the tip of the week, Steve Kiefer, president of GM’s worldwide operations, instructed Reuters.

That blow to manufacturing was on prime of the 60,000 models misplaced earlier within the 12 months because the novel coronavirus unfold, making it seemingly GM Korea wouldn’t flip a revenue this 12 months except it may recapture that output, he added.

“We’re principally being held hostage within the brief time period by lack of car manufacturing,” Kiefer stated in a phone interview. “That’s having a really vital short-term monetary affect.”

The commercial motion would “principally make it inconceivable for us to allocate any additional investments or … new merchandise to the nation of Korea. It’s making the nation non-competitive”, he stated.

“It will have long-term results if we will’t get this resolved within the coming weeks.”

GM builds as many as 500,000 automobiles a 12 months in South Korea, transport many to the USA together with the favored Chevrolet Trailblazer SUV. The automaker employs about 12,000 individuals within the nation.

GM administration desires a two-year labor deal as a substitute of the standard one-year settlement, and have provided a signing bonus of 8 million received ($7,230) for every union member over 2020 and 2021.

The union, nonetheless, desires to stay to a one-year deal and a yearly efficiency bonus of twenty-two million received, in addition to continued operation at each vegetation in Bupyeong.

“We aren’t solely putting over wage points, but additionally over job safety at our No. 2 plant in Bupyeong, which hires about 1,200 staff,” union official Jung Jai-heon stated.

Jung stated the corporate had been placing all of the blame on staff whereas senior administration had acquired efficiency bonuses since 2018.

The 2 sides have failed to achieve a deal after 24 rounds of negotiations.

LONG-TERM DOUBT

Some present and former subcontract staff are additionally demanding to be employed as full-time employees with pay and advantages to match, doubtlessly costing GM Korea about $320 million.

Authorities officers had been unavailable for remark however the Korea Growth Financial institution (KDB), GM Korea’s second-largest shareholder, known as on each side to make concessions.

GM Korea reported an working lack of 332 billion received ($300.8 million) in 2019, trimming a lack of 615 billion received a 12 months earlier.

Confronted with low manufacturing charges and poor gross sales, GM agreed on a rescue bundle price $7.15 billion, together with $750 million from KDB in 2018. Underneath the phrases of the binding deal, GM can’t exit its funding within the nation for 10 years.

Whereas it could be arduous to give up South Korea within the brief time period, the long-term future was doubtful, Kiefer stated.

GM would abide by any previous agreements, together with plans to construct a 2023 Chevrolet crossover in Korea, however even spending on that program had been suspended as a result of strikes.

“We would favor to make this mannequin work … however as of now, we’re dropping confidence that we’re going to have the ability to proceed to spend money on that nation,” Kiefer stated.

GM had different choices in Asia together with China, the place it constructed almost 5 million automobiles a 12 months, he stated.

($1 = 1,103.6000 received)

Reporting by Ben Klayman in Detroit and Heekyong Yang in Seoul; Further reporting by Joyce Lee; Enhancing by Stephen Coates, Robert Birsel



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