The worsening labor dispute at GM Korea is casting a dark cloud over the future of the financially troubled automaker. Although GM Korea has postponed new car assignments and redemption of its loans after April 20 when it is required to submit the final self-help plan, GM Korea’s labor and management negotiation, which is the driving force of its revival, is going steadily downhill. The company’s capital shortages are at its worst.
According to GM Korea on April 8, GM Korea President and CEO Kaher Kazem had a meeting with employers by division, such as research center, production and purchase, for two days from the 5th to the 6th. He requested to have the meetings to share the financial difficulties the company faced. Kazem said GM Korea would not be able to pay performance-related bonuses in order to secure funds to pay subcontractors for auto parts.
GM Korea has paid 300 billion won (US$280.64 million) to its subcontractors for a month. When the company did pay performance-related bonuses to workers on the 6th, it wouldn’t be able to send payments to its subcontractors. Some union members took over the office of GM Korea President Kazem at the Bupyeong plant for two days and wielded violence by smashing chairs into the floor, demanding the payment of bonuses. Accordingly, the relations between labor and management is worsening. The 10th and the 25th are the payday of production employees and general employees, respectively. GM Korea is planning to pay wages to production employees on the 10th as usual.
The GM headquarters has decided to defer new car assignments, which can be a foothold of GM Korea’s revival, until a due diligence is completed. The Korea Development Bank is seeking to advance the completion of the due diligence of GM Korea from early next month to the end of this month.
GM has not announced its official guideline but the company can expect to receive financial support from the South Korean government only when it assigns new cars to its South Korean operations. However, the effective deadline is April 20. This is because the due diligence is meaningless if GM Korea fail to reach an agreement on its self-rescue plan, including the reduction of welfare benefits worth 100 billion won (US$93.55 million), until the final deadline.
The maturity of GM Korea’s debts, which fall due the end of this month, have extended by one month. The amount of its debts that matured from the 2nd to the 8th totaled 988 billion won (US$924.23 million).