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Carmaker should take action to restore trust
GM Korea is likely to face a dispute with its labor union over its unilateral plan to set up a separate R&D corporation. Union autoworkers have threatened to go on strike in protest of what they see as an initial step by the Detroit-based General Motors to scale down or shut down its car assembly lines in Korea.
If the walkout takes place, it will mark another labor dispute after the union's collective action against management over the financially troubled company's drastic restructuring program early this year. The dispute ended in May when the state-run Korea Development Bank (KDB), the second-largest shareholder of GM Korea with a 17 percent stake, agreed to inject 810 billion won ($715 million) into the automaker to keep it afloat with a promise to maintain the factory here for at least 10 years.
Now the new row is looming large after GM Korea shareholders approved the company's plan on the R&D entity Friday. Under the plan, the firm will establish GM Korea Technical Center by integrating its existing design and engineering divisions. The carmaker said the R&D unit will carry out development work for GM's compact SUVs.
However, union workers fear that the plan, if implemented, may lead to the closure of the assembly lines in order to maintain only a research center in the country. Their fear may appear groundless because the company has denied any allegations of shutting down the factory or withdrawing from Korea.
GM Korea President and CEO Kaher Kazem said the establishment of the R&D unit will help the automaker put a bigger focus on local manufacturing, export and domestic sales. However, his remarks seem to be unconvincing to union workers, given GM's track record of pulling out of Australia, Indonesia and Thailand for poor performance.
Amid a lack of trust between labor and management, such a R&D center plan is only raising concerns about GM's potential exit from Korea. The problem does not stop here. How GM Korea pushes for the plan also angers KDB which is strongly against what it calls a unilateral decision.
KDB had tried in vain to block GM Korea from holding a shareholders' meeting to prevent the passage of the controversial R&D center plan. It filed an injunction against the meeting with a local court, but it was turned down. KDB Chairman Lee Dong-gull had threatened to exercise his veto because the motor company had unilaterally decided on the plan without any consultation with the shareholder bank.
If management and the union are at loggerheads again, this could derail the company's efforts to normalize its operations. Both sides urgently need to regain trust and solve the problem with dialogue. Most of all, GM Korea should no longer make a decision unilaterally. It must hold sufficient consultations with KDB and the union. KDB is also required to exercise its shareholder rights more actively to check the automaker and not to waste its investment.
