GM Korea drops plan to file for bankruptcy following last-minute wage deal

by SpeedLux
General Motors

General Motors’ South Korean unit dropped their plan of filing for bankruptcy following winning concessions on pay, bonuses and advantages from its labor union in a tentative deal reached on Monday.

The deal will make the way for almost $500 million in fresh capital injection by the South Korean government, providing much-needed liquidity to South Korea to pay workers and its providers, but slumping auto sales and low factory run-rates raise concerns about its longer-term future.

The concessions by GM Korea’s powerful auto union are anticipated to heap pressure on other auto unions for comparable moves, at a time when South Korea’s auto industry is grappling with increasing labor costs and slow demand from the United States and other countries.

“Through the recent agreement, General Motors will be a competitive manufacturing company,” stated Kaher Kazem, chief executive of GM Korea.

GM shocked South Korea in February when it revealed a major restructuring strategy for the money-losing unit, which involved closing one of its four plants in the country and voluntary redundancies for 2,600 employees.

The automaker had sought wage concessions from the union together with government funding and incentives to save its other three South Korean plants.

The board of GM Korea postponed a decision on whether to submit for court-managed bankruptcy protection until Monday evening after the automaker couldn’t reach a wage deal with its labor union in time to meet a Friday deadline.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

SpeedLux

SpeedLux is a high-authority automotive blog providing the latest automotive news and reviews. SpeedLux covers everything related to cars, bikes, and motorcycles, from news and reviews, to troubleshooting guides, tips and tricks, and more. SpeedLux was born in 2009 and we have over 20,000 articles published on our blog. We thank all our readers, as well as our partners, without whom we could not have reached this level.

Subscribe

©2009 – 2024 SpeedLux – Daily Automotive News and Reviews. All Right Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More