Banner Vehicles July 2019

Is General Motors moving out of South Korea?

GM WorkersThe auto workers at one South Korean GM plant are upset and holding protests against its intended closure. They are calling the move a death sentence, and have threatened to strike.

This is all taking place in Gunsan, a city a little bit larger in population than Hamilton in the Waikato. The plant employs around 2,000 workers and has been running at 20% of its capacity for the past 3 years.

The city itself has been working hard to keep GM viable by purchasing GM cars for official use. Some of the city officers are saying that 20% of people in Gunsan, including family members of workers at GM and those involved in suppling parts, rely on the GM in some way.

Gunsan GMGM's South Korean operation employs around 16,000 workers in total and has already launched a voluntary separation program and this plant in Gunsan is to be shut down by May. GM will be deciding very soon the fate of the remaining three plants in the country.

GM's planned revamp of its loss-making South Korea operations is the latest in a series of steps to put profitability and innovation ahead of sales and volume. Since 2015 GM has exited unprofitable markets like Europe, Australia, South Africa and Russia. It’s offering South Korean workers 3 times their annual base salary, money for tuition and more than $9,000 towards a new car as part of the voluntary separation package.

However, the workers are far from happy about GM’s intended exit. The unions are strong in South Korea and are working on a detailed plan in protest against the shutdown and have threatened a strike or a sit-in rally at the headquarters.

Korean HoldenIn the background to all this the U.S. President, Donald Trump, has been critical of the U.S.-South Korea trade agreement. He recently approved tariffs on South Korean washing machines, while South Korea has vowed to take countermeasures using the World Trade Organization (WTO).

South Korea's trade ministry said it will take a dispute against the United States to the WTO, involving the imposition of high anti-dumping duties on South Korean steel.

GM executives have often complained about South Korea's high wage economy and its strike-prone labour unions. But this union has blamed GM for reducing output and said that lower wages were not acceptable. The strong unions have imposed heavily on the country's automobile industry with historic high costs and low productivity.

This is seen as a deep-rooted issue, which can't be fixed overnight. So, the signs are that GM is moving out of town, we may now see the end of Korean Holden’s in this part of the World soon.

March 2018


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