Troubling times lay ahead for GM Korea. Amid tense labor negotiations and lagging sales, GM Korea CEOÂ 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.
Comments
Oh oh looks like time to sell. All the ingredients for a GM sale labor problems, low sales and no profit.
GM is turniong out to be a joke , in my opinion . It tried to push the slow selling Spark on it’s dealers in India and it faired poorly compared to the other makes . Suzuki was partnered with GM years ago but Suzuki was dropped and it now is about the top selling brand in India . GM in Europe also suffered from foot in mouth disease and didn’t go after VW’s market with a competitive product . GM now , to me , is all about dividends . The old foggies all , don’t appear to hunger for timely product but trim the lineup and make dividends . GM should probably look at marketing refrigerators or microwaves etc , look for high turnover products and who knows , eventually get out of vehicles altogether !!
Despite what is suggested, I suspect GM’s divestment of Opel Group will have little impact upon GM Korea. Production of the original Vauxhall / Opel Mokka was originally shared between Korea and Zaragosa, before being transferred wholesale to Eisenach last year. Beyond that, the only vehicle produced by GM Korea for export to Opel Group markets is the slow selling Vauxhall Viva and Opel Karl.
GM Korea may actually be a beneficiary of the demise (within GM) of Opel Group if it plays its cars right. British and Polish built Holden Astras are likely to ultimately be replaced by a Korean built Cruze derivative when the Astra reaches the end of its days. And I’d be reasonably certain, the incoming German built Holden Commodore will be replaced by Korean built fayre. Assuming of course that GM keeps the faith with its Korean offshoot…. and that could be a big assumption.
Gm policy is clear: run away. In spite of finding solutions or new roads, GM just close its operations and run away.