GM is proposing a set of structural changes to improve competitiveness and attract greater investments to the South Korean auto industry, where the automaker has three manufacturing plants and one of the most strategic product development centers globally. The proposals were made at a business summit in Seoul, themed “Foreign-Invested Companies, Hopes for the Next Government.”
The current president and CEO of GM Korea, Kaher Kazem, participated in the 25th Automobile Industry Development Forum & 20th Industrial Development Forum of the Asian country, where he exposed the challenges facing the South Korean automotive industry and proposed improvements for long-term growth. The highest representative of GM in Korea stressed the importance of improving labor policy and establishing a package of incentives for foreign investment.
“Korea has clear advantages in the auto industry, such as free trade agreements (FTAs) with major foreign countries, stable economy, high engineering expertise and manufacturing capacity, and highly competitive parts supply chain,” said President and CEO of GM Korea, Kaher Kazem, in a statement. However, despite these strengths, challenges remain. “Labor reform, labor flexibility, and incentives for foreign-invested companies need to be improved,” he added.
Before taking up his next role on June 1st as the new Executive Vice President of SAIC-GM in China, the outgoing GM Korea president and CEO discussed ongoing job uncertainty limiting foreign investment in the country’s auto industry, where negotiations with the workers’ union are held each year. In this sense, the company proposes a labor reform with better deadlines as in other developed countries of the world.
“The factors that hinder continuous investments in Korea include short-term labor negotiations (once a year in Korea vs. every four years in the U.S.) and short tenure of the union executive (two years) hindering stable labor relations. In addition, the regulatory changes, lack of clarity and uncertainty in the use of dispatched workers lead to significant uncertainty,” Kazem finished.
GM Korea is the only foreign automaker to independently build vehicles in South Korea, as well as the largest foreign direct investment (FDI) company in the Korean auto industry, directly employing some 12,000 workers and tens of thousands of indirect jobs. As part of the transformation of its business that began in 2018, the company is currently executing important investment plans to manufacture new-generation vehicles in the country starting next year.