Sunday, June 24, 2018
More and More GM Korea Workers are Losing Their Hope
Amid Losing Hope
More and More GM Korea Workers are Losing Their Hope
  • By Jung Min-hee
  • February 26, 2018, 00:15
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South Korean Prime Minister Lee Nak-yeon (second from the right) participated in a meeting on February 24 to discuss how to protect Gunsan City from withdrawal of GM.
South Korean Prime Minister Lee Nak-yeon (second from the right) participated in a meeting on February 24 to discuss how to protect Gunsan City from withdrawal of GM.

 

It has been found that an increasing number of employees are applying for voluntary retirement.

GM announced on February 13 that it would shut down GM Korea’s plant located in Gunsan by May this year. At the same time, employees were allowed to apply for voluntary retirement by March 2. GM said that it would provide 200% to 300% of their annual salary and school expenses for their children as well as severance pay for those doing so.

In the meantime, due diligence on GM Korea is scheduled to be initiated before next week. The purpose of the due diligence is to clarify the cause of GM Korea’s deficit and the South Korean government is planning to decide on its support based on the result of the due diligence. The government is planning to complete the process within a couple of months.

Still, it remains to be seen whether the process can be completed within such a short period of time. This is because GM was rather uncooperative in providing data in the past. Besides, according to the Korea Development Bank (KDB), GM promised to lower the interest rate applied to GM Korea’s borrowings from itself in 2015 in return for collateralization of accounts receivable, but the interest rate was not lowered in spite of the collateralization.

The KDB is planning to focus on GM Korea’s quarterly business performances and loss analysis during the due diligence. At the same time, it is going to look in depth into the high-interest lending from the GM headquarters, supply prices applied to GM Korea, and its excessive R&D costs, which have been pointed out as the main causes of GM Korea’s red ink.