General Motors (GM) Korea business site (GM Korea) is experiencing intensified conflict between labor and management over wage negotiations this year. With GM expanding investments in the U.S. and selling off Korean assets, there are opinions that the union's pressure could provide justification for withdrawing from Korea.
According to the completed automobile industry on the 13th, GM Korea's labor and management have been negotiating wage negotiations since the 29th of last month. The labor union's demands include ▲ an increase in the basic salary of 141,300 won ▲ performance bonuses equal to 15% of net profit ▲ payment of 500% encouragement funds of regular wages. If negotiations are resolved as the union requests, the total amount of performance bonuses and encouragement funds per person would reach 63 million won.
GM Korea is reported to have taken the position that it is difficult to accept the union's demands. The union has based its demands for wage increases and performance bonuses on the fact that GM Korea achieved an operating profit of 1.3673 trillion won last year. The management argues that austerity is necessary, citing that profitability will decline this year due to high tariffs in the U.S.
GM Korea effectively serves as an outsourced production base for GM. It is responsible for the production of the Trailblazer and Tracker crossover compact SUVs sold in the U.S. However, as the Trump administration imposed a 25% tariff on all imported cars starting in April, GM Korea has inevitably faced setbacks.
Conflict has deepened between the labor and management at GM Korea during the wage negotiation process, leading to heightened tensions. GM Korea announced that it would sell off idle assets from its direct service centers across nine locations and the Bupyung plant on the 28th of last month, the day the first negotiations were scheduled. The union strongly protested this, suggesting that management was signaling the possibility of withdrawal ahead of wage negotiations to gain a favorable position.
On the 11th, GM Korea reportedly notified Ahn Gyu-baek, chairman of the metal workers' union at GM Korea, of his dismissal. Ahn had protested when GM Korea increased production at the Bupyung plant without consulting the union in 2020, leading to disciplinary action for damaging office equipment. He subsequently filed a lawsuit to nullify the disciplinary action but ultimately lost the case in February.
In response to this, the union claims, "Even after the Supreme Court ruling, GM Korea recognized Ahn's status as a labor-management partner, and now to notify him of dismissal is intended to pressure the union."
The union has recently intensified its pressure on management. Since the 10th, the executive board has entered into an overnight sit-in, and on the 17th, plans to hold an advance meeting for all union members at the Bupyung plant. From the 18th for two days, a vote will be held to ask whether to engage in strike activities. As labor-management negotiations are at a stalemate, many forecasts suggest that the union is likely to resort to strong measures such as strikes.
In the completed automobile industry, concerns are growing that the union's actions could provide GM headquarters with justification for withdrawing from Korea. In 2018, when the union occupied the president's office and damaged equipment after then GM Korea CEO Ka Hee Kim informed them that performance bonuses could not be paid, GM headquarters criticized the union and restricted trips to Korea for over two months.
Ka Hee Kim, before the expiration of his term in 2022, attended an event and criticized, "The dysfunctional labor-management relations and the policies biased towards the labor sector are obstructing long-term foreign corporate investments in Korea."
Recently, GM has shown a tendency to concentrate production facilities in the U.S. According to major foreign news outlets such as Bloomberg, GM announced on the 10th (local time) that it would invest a total of $4 billion (about 5.5 trillion won) over two years to expand its factories in Michigan, Kansas, and Tennessee. Additionally, some production previously done in Mexico will be transferred to the U.S.
GM has been operating factories in countries like Mexico and Korea, where it does not have to pay tariffs due to Free Trade Agreements (FTAs) for cost reduction. However, it is believed that, following the initiation of the Trump administration's tariffs on imported cars, GM has decided to increase investment and production within the U.S. due to the increased likelihood of deteriorating performance.
The Trump administration adjusts tariff rates through individual negotiations for mutual tariffs imposed by countries. However, since automobiles fall under item-specific tariffs, there is no change. If the U.S. continues to impose high tariffs on imported cars, many predict that GM will consider withdrawing from the Korean market.
A spokesperson from the completed automobile industry commented, "GM has many idle production facilities in the U.S., making it easier to transfer production volumes," stating, "If labor-management conflicts escalate this year, it is highly likely they will announce their intention to withdraw from the Korean market, just as they did in 2018."