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| Members of the GM Korea workers' union hold banners during a protest at the company's Incheon plant, Tuesday. Courtesy of GM Korea union |
By Nam Hyun-woo
GM Korea is remaining mum over the possibility of the U.S. auto giant's withdrawal from the Korean market after a senior General Motors executive hinted Wednesday at a "possible exit" citing the prolonged strike by the union at the company.
GM International Operations President Steve Kiefer made the remarks in an interview with Reuters questioning the future of the U.S. carmaker's operations in Korea. GM Korea refused to make any additional comments, though the subsidiary acknowledged its awareness of the remarks.
Reportedly, GM Korea was waiting for the union to respond to Kiefer, but the workers' body has yet to present any official response as of Thursday afternoon.
Kiefer told Reuters that GM was "basically being held hostage in the short term by a lack of vehicle production" and the continued labor dispute would "basically make it impossible for us to allocate any further investments or ... new products to the country of Korea." He added GM Korea will "have long-term effects if we can't get this resolved in the coming weeks."
Kiefer's remarks were interpreted as his candid assessment of the GM Korea union's unyielding demands for wage hikes and new vehicle models to be assembled at GM Korea's plant 2 in Incheon, while implying that the prolonged dispute may see the company exit Korea.
Unsurprisingly, employees are expressing unrest over the company's future. GM Korea's union has been staging multiple four-hour partial strikes since Oct. 30, which the company estimates to have inflicted a production loss of 17,000 vehicles.
"For employees, the remarks must come as a serious worry," said an automotive industry official having knowledge of GM Korea's situation. "GM Korea has been making efforts to convince employees and customers that it will have a sustainable future in Korea, citing the 10-year agreement, but the remarks, even though they were a warning to the union, are amplifying worries among non-union employees."
The GM Korea Supplier Association also made a move, Thursday, staging a protest demanding the union and management make concessions. During the protest near GM Korea's Incheon plants, the association said "if the dispute is protracted further, suppliers having a weak liquidity position will end up going bankrupt."
In 2018, GM promised it would keep its Korean plants fully operational for at least 10 years in return for a $750 million rescue package from the state-run Korea Development Bank.
GM Korea has been striving to quench rumors that the parent company may withdraw its manufacturing operations from Korea and retain only its import business. But another industry official said GM may withdraw its investment anyway using the labor dispute as an excuse.
"Regardless of the dispute, GM Korea has been posting worrisome losses for years due to slow sales," the official said. "As Kiefer said, the company may not quit Korea in the short term, but the sales slowdown and high cost structure of GM Korea have long made GM rethink its Korean operation."
Last year, GM Korea posted an operating loss of 332.4 billion won, extending its losing streak for seven straight years.
