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March 29, 2024

GM Korea, labor union make last minute adjustments in deal

PUBLISHED : April 23, 2018 - 16:52

UPDATED : April 23, 2018 - 16:52

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[THE INVESTOR] Scurrying to meet the new deadline line of April 23 5 p.m., GM Korea and the union worked out the details of their initial compromise on job security and other key issues on April 23.

It was considered the very last-ditch efforts to avoid court receivership, as the related parties gathered for the 14th wage negotiations at 5 a.m. at the carmaker’s Bupyeong factory in Incheon.




GM Korea’s board of directors were set to vote on court receivership at 8 p.m. should the talks fall apart.

The main sticking point had been the measure for 680 workers who had chosen to remain at Gunsan factory, with the headquarters initially offering them four-year leave without pay as one of the options.

The related parties -- including GM Executive Vice President Barry Engle, GM Korea CEO Kaher Kazem, chief of GM Korea‘s union Lim Han-taek, Rep. Hong Young-pyo of the ruling Democratic Party, and Vice Minister of Employment and Labor Yi Sung-ki – had continued their marathon talks overnight from April 22.

Their general consensus included relocating the remaining workers to Incheon and Changwon and accepting additional voluntary resignations. They scrapped the proposal of the four-year-unpaid leave, which the labor union had argued was the same as layoffs.

As for the workers who refuse to be relocated or resign voluntarily, the two sides agreed to have a further discussion.

The company’s side also suggested forming a committee to discuss future developments with the labor union, and another committee for the second factory of Bupyeong to discuss future allocation of models that could replace Malibu.

The labor union reportedly agreed to such suggestions in principle and demanded additional tweaks in terms of welfare benefits.

As the negotiation continued into the afternoon, top government officials called for a smooth compromise to “avoid the worst.”

Finance Minister Kim Dong-yeon, while in Washington, encouraged the two sides to reach a consensus, reiterating the government’s support to normalize the operation will hinge on their discussion.

Speaking to reporters, Kim said, “Prerequisite (for consensus) is that the company and the union share the pain, and agree on sustainable business normalization plans. We will go by the book.”

Choi Jong-ku, chairman of the Financial Services Commission, noted compromise between GM Korea and the unionized labor along with GM headquarters’ commitment for sustainable business as preconditions for support from the government and state-run Korea Development Bank.

“The government and the KDB will decide on whether to provide various support programs based on long-term business normalization measures GM presents as a responsible major shareholder,” Choi told reporters after an event in Yeouido, western Seoul.

“I am aware that the interim due diligence report will be submitted within a day or two. Whether the on-going value is greater than liquation value is a point of interest, but it won‘t be the only aspect considered.”

The Seoul government has set out three principles for a 500 billion won ($467.8 million) fund, which includes: responsible role by major shareholder for normalization at GM Korea; all interest groups including shareholders, creditors and labor union share the pain; putting together long-term, sustainable business normalization measures.

Finance Minister Kim Dong-yeon returned to Korea on April 23 afternoon, and one of his first schedules was to head to the government complex in Seoul to discuss recovery efforts for GM Korea with vice-ministers.

GM Korea has to pay its workers 80 billion won in wages on April 25, and severance payment worth some 500 billion won to 2,600 people on April 27.

According to interim due diligence report on GM Korea, the going concern value of the carmaker was worth more than liquidation value, and it could post profits from 2020 on recovery plans. 

By Kim Bo-gyung/The Korea Herald (lisakim425@heraldcorp.com)

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