ROK Drop

Avatar of GI KoreaBy on August 14th, 2013 at 7:45 pm

GM Could Soon Be Leaving South Korea

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.

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7
  • JoeC
    8:02 pm on August 14th, 2013 1

    “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.”

    Nine-thousand million dollars per member! :shock: That obscenely outrageous. What was GM thinking!!!

  • Baek, In-je
    8:25 pm on August 14th, 2013 2

    The militant unionists stormed the CFO’s office wielding metal pipes over….wait for it….meal subsidies. Wages at GM Daewoo have risen 109% since GM’s acquisition. Plus, they have to put up with ajosshis. Oh no…time to leave.

  • ChickenHead
    11:30 pm on August 14th, 2013 3

    Somebody needs to sit Korean autoworkers down and explain to them exactly what happens when they get greedy with a multinational automobile manufacturing company.

    Perhaps a city tour of Detroit will convince them that factories can be moved elsewhere.

    JoeC, maybe it is correct and we better check the exchange rate. Maybe the Chinese stopped buying bonds when we were not looking.

  • John in LA
    12:54 pm on August 15th, 2013 4

    Just want to add that the outrageous demands by auto factory worker isn’t just happening in GM Korea. It’s a serious problem at Hyundai factories too.

    It’s just so weird that they are so militant.

  • Baek, In-je
    2:12 pm on August 15th, 2013 5

    A word of advice to Korea: your stupid labor unions are pricing your labor force out of every industry (not solely domestic)you have that might be competitive. At this rate, only shipbuilders will be able to be keep up with wages.

  • Bob
    3:59 pm on August 15th, 2013 6

    #2,

    Years ago, Korean autoworkers were cheaper by only a few cents an hour in comparison to their North American and European counterparts, and that was enough to get GM interested in buying Daewoo. Something the union needs to consider.

  • Leon LaPorte
    5:14 pm on August 15th, 2013 7

    Bye, Bye, American Pie…

 

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