GM Korea’s labor and management have tentatively agreed on a restructuring plan on April 23, clearing a key hurdle on the path to the troubled company’s normalization.
The two sides managed to narrow their differences on how to treat the 680 employees left after the recent voluntary retirement at the Gunsan Plant.
They agreed to implement a voluntary retirement program for the employees and redeploy those who choose to remain to posts other than the current ones. They also agreed not to put the employees on unpaid leave.
In a negotiation held on April 21, the employers proposed to redeploy some of the 680 employees to Bupyeong and Changwon plants and shorten the period of unpaid leave from five years to four years, but the labor union refused to accept it.
The two sides also agreed on a set of restructuring measures, including wage freeze, no bonuses and the suspension of some work benefits.
The agreement came near the deadline for negotiation set by the U.S. parent company of the Korean subsidiary. The company had originally set the deadline for an agreement from the union at midnight Friday, but it was delayed to 5 p.m. Monday.
The agreement could be reached as both sides have made concessions. For instance, the labor union has given up on reopening of the Gunsan Plant to demand continuous employment of its workers, while the management has come up with measures such as an additional voluntary retirement plan.
Despite the labor-management agreement, GM Korea has a long way to go before normalization is achieved. The company needs to get financial support from the Korean government.
The Korea Development Bank, which is the second largest shareholder of GM Korea, has conducted due diligence on the debt-stricken company. The bank said GM Korea would be able to generate profits in 2020 if its business stabilization plan is executed.
In its restructuring plan for GM Korea, GM proposed to convert $2.7 billion debt owed to it by the Korean subsidiary into equity and offered to share an investment of $2.8 billion between GM Korea and the state-run Korea Development Bank (KDB). It also suggested allocating two new vehicles to Korean plants.
The KDB has said it could inject about 500 billion won (US$470 million), or 17 percent of the $2.8 billion, into GM Korea if the company’s labor and management agree to proceed with restructuring measures.