GM Korea extended its bankruptcy filing from Friday to Monday for one last round of negotiations with the auto union. The two sides have reached a tentative wage agreement, which will keep the local business from filing for bankruptcy.
The Washington Post reported on the tentative agreement on Monday, and the union will vote on the deal later this week.
With a tentative agreement in place, it also opens up funding from the state-owned Korean Development Bank. The KDB owns a 17 percent share of GM Korea and has been conducting due diligence to ensure the unit can survive on its own without continued incentives.
“Ratification of the tentative agreement is critical to our viability plan and securing support of the Korean government and our shareholders, KDB and GM,” GM Korea CEO Kaher Kazem said in a statement. “The labor union has demonstrated its commitment and we continue to work with our other key stakeholders to gain their support.”
According to the preliminary details, GM Korea and the union held 14 rounds of talks and finally reach a positive conclusion for the remaining South Korean facilities. GM Korea will freeze wages, cancel some bonuses and reduce some benefits.
However, GM and the union agreed to encourage the workers affected to voluntarily leave GM Korea through severance or attempt to place them at other production sites.
As for the new product, Barry Engle, GM’s executive vice president said the models are “important” and will be mostly shipped abroad.