GM Korea output may cut annual output by 20%, extend losses for 7th year

2020.11.18 11:34:15 | 2020.11.18 14:32:46

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Labor unrest has disrupted output of 20,000 vehicles in the first half for GM Korea, or nearly 70 percent of the carmaker’s average monthly turnout, and may roll back annual yield by 20 percent this year, renewing jitters about a possible exit by its American parent after losses extend for the seventh year in 2020.

According to GM Korea on Tuesday, factory workers’ refusal to cover overtime and their partial strikes lasting nearly a month has hurt output of 20,000 units, about 68 percent of GM Korea’s monthly average production of 29,130.

The union has been refusing to work overtime – both weekend and after-hours work, since Oct. 23 – despite the urging from the management to cover up for the losses during pandemic peak. The union waged partial strikes four times since Oct. 30 and will continue until Nov. 20.

The union and management of GM Korea failed to narrow differences over wage and working conditions and new vehicle allocation issues during 24 rounds of talks since July 22.

An unnamed official from GM Korea said that if the unionized workers continue their partial strike until Nov. 20, the automaker will see an over 20 percent plunge in production this year from a year ago. It would also be difficult to expect additional orders for new vehicles in the future as it has not been able to meet orders from its Detroit-based parent.

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GM Korea received large orders for its sport utility vehicle (SUV) Trailblazer from the U.S., but was unable to meet the delivery.

GM Korea’s output that stopped at 409,830 units last year will likely further fall to around 300,000 this year, delivering operating losses for the seventh year this year.

GM Korea CEO Kaher Kazem in September warned that GM could study pulling out of the Korean market if labor conflict poses as ongoing risk.

GM Korea received bailout fund of 810 billion won in 2018 from state lender Korea Developmetn Bank on the condition that it would invest in an auto manufacturing plant in Changwon, South Gyeongsang Province and add two new global models to its production.

During wage negotiations last week, the management proposed a revised deal that includes a freeze in basic wage for 2020, one-time 8 million won ($7,226) bonus to each member, and discounts to car purchases by GM Korea workers, but the proposal was rejected by the union, which wants allocation of new cars at its No. 2 Bupyeong plant in Incheon, engine production at Changwon plant, and re-negotiation over regional distribution center shutdown.

By Park Yun-gu and Lee Eun-joo

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