The president of GM Korea, Kaher Kazem, issued a warning to union leaders this week, saying increased wages will hurt the struggling subsidiary’s profits and threaten its competitiveness.
According to Korea Times, the worker’s union representing GM Korea laborers is seeking increased monthly wages of 5.7 percent, along with 1 and a half months’ worth of wages in performance-based and a $5,400 cash bonus.
As was reported earlier this week, the union has ceased negotiations with GM Korea for the remainder of 2019 after months of intermittent strikes. The union stopped meeting with the automaker in order to elect new leadership and plans to return to the negotiating table in early 2020.
Korea Times also says Kazem held an “emergency” meeting with fellow GM Korea executives at the automaker’s plant outside of Seoul this week. There, Kazem said it was “urgent” the company and the union reach a resolution and focus on improving the company’s profitability. Kazem also indicated shareholders and other GM Korea partner companies are becoming concerned about the wage stalemate and possible permanent strike. Thus far, workers have only walked off the job for short periods of time.
In a statement, GM Korea said it remains “committed to reaching a fair and reasonable agreement based on mutual respect and understanding,” with the union.
Earlier this week, this week, GM Korea denied rumors it would cease operations, claiming it remains an important market for General Motors. However, the American automaker has struggled to turn a profit in South Korea, accumulating net losses equivalent to $3.4 billion USD between 2014 and 2018, including 859 billion won, or just under $724 million USD, in 2018 alone.
GM Korea was bailed out by GM and the Korean government in 2018, leading the automaker to establish a “comprehensive” turnaround plan for the company. Part of that strategy included bringing in more models from the U.S., such as the Traverse and Colorado, along with the Chevrolet Camaro. GM Korea has been “overwhelmed” by orders for the Traverse since launching the vehicle there in September, but the UAW strike in the U.S. may lead to long wait times for the vehicle in South Korea.
GM Korea and GM operate three plants in South Korea—two at its Incheon Complex just outside of Seoul and another further south in Changwon. GM Korea builds the Chevrolet Trax and Buick Encore for both local consumption and export and will also build the new Chevrolet Trailblazer and Buick Encore GX. The Chevrolet Spark is also built by GM Korea.
GM Korea is projected to suffer further losses this year due to the worker strikes and sinking sales.
Source: Korea Times