Is anyone surprised that GM is having problems with Korean labor unions?
Rising labor costs and a strengthening South Korean Won may drive General Motors Company (GM) out of South Korea, according to Reuters. While the exit is expected to take time, the company has been avoiding manufacturing new versions of its Chevrolet Cruze and Opel Mokka in the country. This is being viewed as the first step in the automaker’s withdrawal from South Korea.
General Motors has been having trouble with labor unions in South Korea recently. Last month, labor strikes resulted in production losses of over $90 million, forcing the company to reach a wage settlement, including yearly bonuses of 10 million Won ($9,000 million) per member. This will significantly add to the already increasing labor costs in the country.
Moreover, a South Korean high court ruling from last year states that the base pay of workers, which is used to calculate overtime and pension payments, should include regularly paid bonuses. This ruling is currently under review by the Supreme Court. However, if it is approved by the court, it could lead to a double-digit increase in General Motors’ labor costs in the country.
General Motors currently manufactures about one-fifth of its cars in South Korea, mostly for export. Thus, any problem faced in the country impacts the company’s performance. [Yahoo Finance]
You can read more at the link such as GM’s plans to open four new car manufacturing plants in China.