General Motors Korea has had a tough couple of years, with the automaker receiving a bailout via its American parent company and the Korean government last year, before its workers started intermittent strikes this year demanding increased wages. Slow sales, along with reduced production due to the strikes, have led to projected losses for the GM subsidiary in 2019.
Despite these challenges, GM remains committed to the Korean market. Speaking to the Korean National Policy Committee this week, GM Korea Vice President Choi Jong said the company established a business recovery plan amid the bailout last year that it plans to see through to completion. Business Korea also reports the executive claimed GM would “never” exit the Korean market as it is playing an important part in the American company’s global business.
However, challenges still remain if it wants to ensure success in the country. GM Korea held its 10th round of negotiations with the worker’s union on October 11 and failed to reach an agreement. Union representatives are now saying they won’t return to the bargaining table until early next year, as they plan to host leadership elections in the fourth quarter of 2019. The union represents about 10,000 GM Korea workers.
Business Korea reports the union wants a 5.65-percent increase in base pay along with a bonus equivalent to 250 percent of their standard wages and an additional bonus of 6.5 million won (about $5,477 USD). They also want GM Korea to provide a long-term business plan for its second plant at the Bupyeong manufacturing complex in Incheon. However, GM Korea has denied these demands, as it is still trying to recover its business following last year’s bailout.
In a statement, GM Korea said it was “committed to reaching a fair and reasonable agreement based on mutual respect and understanding” and pledged to “keep negotiating” with the worker’s union.
According to Just Auto numbers, GM Korea sales fell 6.5 percent to 308,933 units in the first nine months of 2019. It also accumulated net losses equivalent to $3.4 billion USD between 2014 and 2018 when it was bailed out, including 859 billion won, or just under $724 million USD, in 2018.
Part of GM Korea’s turnaround plan is offering new products that were previously not available in the country, like the imported Chevrolet Colorado, Traverse and Camaro. While these vehicles are so far proving to be relatively popular in the country, the ongoing UAW strike in the United States could lead to inventory shortages in the country, though GM Korea denied this.
“We are talking with headquarters to prevent any setbacks in importing the vehicles, and don’t believe the strike in the U.S. will affect the volume heading to Korea,” a GM Korea spokesperson said in a statement.
Source: Business Korea