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It has been a tense couple of months at GM Korea. Back in February, the company announced a restructuring plan for the division which included the closure of the Gunsan plant (one of the four plants operating in South Korea), and voluntary redundancies for 2,600 workers to stem the hemorrhaging of cash. Recently, GM has been pushing its workers’ union for concessions that would total $80 million. This is part of an effort to get a $500 million injection from the South Korean government to pay suppliers and workers. The workers union weren't buying, threatening to strike and trashing company executive offices earlier this month. Then GM threw down the gauntlet, either agree to the concessions by April 20th or we begin bankruptcy proceedings. “Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings,” said GM Korea executive Kaher Kazem in an email to employees. Unfortunately, the date passed with no agreement and it seemed bankruptcy was on the horizon. But both GM and union rep would continue to talk over the weekend to see if a deal could be reached. At the 11th hour, an agreement was reached. “Through the latest agreement, GM Korea will be a competitive manufacturing company,” said Kazem in a statement today. According to Reuters who got to see the deal, the union agreed to freeze base wages, skip bonuses for this year, and cut back on benefits. “The labor union made huge concessions to save the company,” said Hong Young-pyo, a lawmaker of the ruling Democratic Party who worked on the mediation between the two groups. A union spokesman declined to comment when contacted by Reuters, only saying that workers will vote on the agreement later this week. The deal now allows the Korean government to fund Korea Development Bank (KDB) - the second largest shareholder in GM Korea - to provide support. It also allows GM to allocate two new models for the region. But some analysts are still uncertain as to the future of GM Korea. Labor costs, poor sales, and expensive export costs have some wondering if GM is in it for the long run or are planning an exit strategy. “GM has extended the lifeline of GM Korea, but not sure how long it will last,” said Lee Hang-koo, a senior research fellow at Korea Institute for Industrial Economics & Trade. Source: Reuters View full article -
It has been a tense couple of months at GM Korea. Back in February, the company announced a restructuring plan for the division which included the closure of the Gunsan plant (one of the four plants operating in South Korea), and voluntary redundancies for 2,600 workers to stem the hemorrhaging of cash. Recently, GM has been pushing its workers’ union for concessions that would total $80 million. This is part of an effort to get a $500 million injection from the South Korean government to pay suppliers and workers. The workers union weren't buying, threatening to strike and trashing company executive offices earlier this month. Then GM threw down the gauntlet, either agree to the concessions by April 20th or we begin bankruptcy proceedings. “Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings,” said GM Korea executive Kaher Kazem in an email to employees. Unfortunately, the date passed with no agreement and it seemed bankruptcy was on the horizon. But both GM and union rep would continue to talk over the weekend to see if a deal could be reached. At the 11th hour, an agreement was reached. “Through the latest agreement, GM Korea will be a competitive manufacturing company,” said Kazem in a statement today. According to Reuters who got to see the deal, the union agreed to freeze base wages, skip bonuses for this year, and cut back on benefits. “The labor union made huge concessions to save the company,” said Hong Young-pyo, a lawmaker of the ruling Democratic Party who worked on the mediation between the two groups. A union spokesman declined to comment when contacted by Reuters, only saying that workers will vote on the agreement later this week. The deal now allows the Korean government to fund Korea Development Bank (KDB) - the second largest shareholder in GM Korea - to provide support. It also allows GM to allocate two new models for the region. But some analysts are still uncertain as to the future of GM Korea. Labor costs, poor sales, and expensive export costs have some wondering if GM is in it for the long run or are planning an exit strategy. “GM has extended the lifeline of GM Korea, but not sure how long it will last,” said Lee Hang-koo, a senior research fellow at Korea Institute for Industrial Economics & Trade. Source: Reuters -
GM Korea is the Latest Target In the Company's Cost Cutting
William Maley posted an article in General Motors
This past year has seen General Motors not be shy with scaling back operations in various international markets. The company sold off Opel/Vauxhall to PSA Group, ended sales of Chevrolet vehicles in India, and closed down their operations in South Africa. Now, GM's Korea operations are on the chopping block. Last week, GM CEO Mary Barra revealed that company officials were in discussion with minority owners and union officials that could lead to "some rationalization actions or restructuring." "We're going to have to take actions going forward to have a viable business," said Barra during a conference call talking about GM's 2017 financial results. Sales of GM vehicles in Korea have dropped 20 percent, while manufacturing costs have increased. This has made South Korea a poor place to export vehicles to other markets. This week, GM announced that it will shutter the Gunsan plant (one of the four plants operating in South Korea). The plant employs 2,000 out of the 16,000 workers employed at GM Korea. GM said the reason for the closure came down to high labor costs and low output. The plant only operated at 20 percent of its capacity last year according to Reuters. Unsurprisingly, the news angered the South Korean government and workers at the plant. “The government expresses deep regret over GM’s one-sided decision to suspend and shut down” the plant, the finance ministry said in a statement. The ministry said it wants to conduct an audit of GM's operations help with the restructuring plan. As for workers at Gunsan plant, workers staged a protest yesterday, declaring the move a “death sentence”, and threatening a strike. “Let’s protect our right to live on our own,” said Kim Jae-hong, the leader of the workers’ union at the Gunsan branch. A GM Korea spokesman said the company "would continue discussions with the union and seek their understanding over the closure plan." Workers though aren't fully buying this. “We can’t accept this. The company informed us about the closure plan, not asking for our opinion. It was already the end of the discussions,” Dang Sung-geun, a senior official at the union of GM Korea told Reuters. “This is like a death sentence notice before the Lunar New Year holidays.” Source: Automotive News (Subscription Required), Bloomberg, Reuters (2) -
This past year has seen General Motors not be shy with scaling back operations in various international markets. The company sold off Opel/Vauxhall to PSA Group, ended sales of Chevrolet vehicles in India, and closed down their operations in South Africa. Now, GM's Korea operations are on the chopping block. Last week, GM CEO Mary Barra revealed that company officials were in discussion with minority owners and union officials that could lead to "some rationalization actions or restructuring." "We're going to have to take actions going forward to have a viable business," said Barra during a conference call talking about GM's 2017 financial results. Sales of GM vehicles in Korea have dropped 20 percent, while manufacturing costs have increased. This has made South Korea a poor place to export vehicles to other markets. This week, GM announced that it will shutter the Gunsan plant (one of the four plants operating in South Korea). The plant employs 2,000 out of the 16,000 workers employed at GM Korea. GM said the reason for the closure came down to high labor costs and low output. The plant only operated at 20 percent of its capacity last year according to Reuters. Unsurprisingly, the news angered the South Korean government and workers at the plant. “The government expresses deep regret over GM’s one-sided decision to suspend and shut down” the plant, the finance ministry said in a statement. The ministry said it wants to conduct an audit of GM's operations help with the restructuring plan. As for workers at Gunsan plant, workers staged a protest yesterday, declaring the move a “death sentence”, and threatening a strike. “Let’s protect our right to live on our own,” said Kim Jae-hong, the leader of the workers’ union at the Gunsan branch. A GM Korea spokesman said the company "would continue discussions with the union and seek their understanding over the closure plan." Workers though aren't fully buying this. “We can’t accept this. The company informed us about the closure plan, not asking for our opinion. It was already the end of the discussions,” Dang Sung-geun, a senior official at the union of GM Korea told Reuters. “This is like a death sentence notice before the Lunar New Year holidays.” Source: Automotive News (Subscription Required), Bloomberg, Reuters (2) View full article
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As we reported a couple weeks ago, General Motors has decided to pull Chevrolet from Europe to give Opel and Vauxhall some breathing room. But with this pullout comes a problem for GM in South Korea. The continent produced most of the Chevrolet models for Europe. With Chevrolet saying pulling out in late 2015, production volume is expected to drop 20 percent. This has GM thinking about cutting jobs. Reuters reports that GM Korea is planning to launch a "voluntary retirement" the 6,000 salaried workers by March. A spokesperson says this is the fourth round of job cuts since 2009. GM Korea CEO Sergio Rocha says that no production jobs will be cut. "Workloads are too light and there is a lot of anxiety about job restructuring," said an employee. GM Korea is currently working on 2015 Chevrolet Sonic, but reportedly has nothing to work on after that. "For me, this is the biggest crisis facing GM Korea since 2000 (when Daewoo Motor went bankrupt)," the employee went onto say. Source: Reuters William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. View full article
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GM Korea Plans Job Cuts Due To Chevrolet Pullout In Europe
William Maley posted an article in General Motors
As we reported a couple weeks ago, General Motors has decided to pull Chevrolet from Europe to give Opel and Vauxhall some breathing room. But with this pullout comes a problem for GM in South Korea. The continent produced most of the Chevrolet models for Europe. With Chevrolet saying pulling out in late 2015, production volume is expected to drop 20 percent. This has GM thinking about cutting jobs. Reuters reports that GM Korea is planning to launch a "voluntary retirement" the 6,000 salaried workers by March. A spokesperson says this is the fourth round of job cuts since 2009. GM Korea CEO Sergio Rocha says that no production jobs will be cut. "Workloads are too light and there is a lot of anxiety about job restructuring," said an employee. GM Korea is currently working on 2015 Chevrolet Sonic, but reportedly has nothing to work on after that. "For me, this is the biggest crisis facing GM Korea since 2000 (when Daewoo Motor went bankrupt)," the employee went onto say. Source: Reuters William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.
