Troubling times lay ahead for GM Korea. Amid tense labor negotiations and lagging sales, GM Korea CEO James Kim has resigned.
The CEO has been in the position for less than two years and his resignation underscores the choppy waters ahead for GM Korea. Not only is the local union demanding major changes to the pay structure, but sales and exports have declined through 2017.
Domestic vehicle deliveries floundered 37 percent in the month of June and exports fell 13 percent. In total, GM Korea reported a 21 percent decrease in global sales. Those unhealthy figures may not bode well with a GM ready and willing to cut ties with unprofitable markets. GM plans to stop selling cars in India, it will wrap up Australian production later this year and it sold off its money-losing European operations in Opel earlier this year.
The labor negotiations have proved futile. Workers are demanding a switch to a monthly salary. The benefit in the system is compensation for the month even if plants shut down for various reasons. It would also be incredibly costly for GM. A pay increase is also on the table as well.
GM Korea lost $550 million last year and the business has racked up $1.72 billion in losses over the past three years.
However, the sale of Opel is poised to shake things up for GM Korea, especially with regards to manufacturing.
“Opel sales will have both a direct and indirect impact on all of GM’s global businesses, including GM Korea, in their production levels and in new car planning,” GM said in a statement. It also struck down any continued talk of a change to a monthly salary.
Kim will leave as the union applies for government mediation for ongoing labor talks—the final step before a strike. Kim’s final day in the position will be August 31.