General Motors has issued its strongest warning yet that the continued industrial unrest could drive it out of South Korea, just two years after it got a state-backed rescue package to stay.
GM employees have been staging two, four-hour strikes every day since October 30 as they demand an end to a wage freeze put in place after the 2018 deal that saved the operations in the country from bankruptcy.
The strikes and other industrial action have cost the company losing 17,000 vehicles in production, a number that will hit 20,000 by the end of the week, Steve Kiefer, president of GM’s international operations, informed Reuters.
That blow to production was on top of the 60,000 units lost previously in the year as the coronavirus crises spread, making it likely GM Korea would not turn a profit this year unless it could recapture that output, he said.
“We’re basically being held hostage in the short term by lack of vehicle production,” Kiefer said in a telephone interview. “That’s having a very significant short-term financial impact.”
He said that the industrial action would basically make it impossible for the automaker to allocate any further investments or … new products to the country of Korea. It’s making the country non-competitive, he added.
“It is going to have long-term effects if we can’t get this resolved in the coming weeks.”
The automaker builds as many as 500,000 vehicles annually in South Korea, shipping many to the United States including the popular Chevrolet Trailblazer SUV. The automaker has hired about 12,000 people in the country.
GM management wants a two-year labor deal rather than a usual one-year agreement, and have provided a signing bonus of 8 million won ($7,230) for each union member during 2020 and 2021.
The union, however, wants to stick to a one-year deal and an annual performance bonus of 22 million won, together with continued operation at both plants in Bupyeong.
“We are not only striking over wage issues, but also over job security at our No. 2 plant in Bupyeong, which hires about 1,200 workers,” said Jung Jai-heon, the union official.
Jung said the automaker had been putting all the blame on the employees while senior management had received performance bonuses since 2018.
The two sides couldn’t reach a deal after 24 rounds of negotiations.
