The GM Korea Branch of the Korea Metal Workers Federation held a strike vote on Oct. 16 over the proposed spin-off of the company's design and R&D functions. Of the 10,234 union members, 8,899 participated in the vote, with 8,007 members voting in favor of the strike. As a result, if the Central Labor Relations Committee makes a decision to suspend mediation, the labor union will be able to go on a lawful strike at any time.
Earlier, GM Korea decided in a board meeting on October 4 to spin off its design center and R&D center to form a separate corporation. The labor union interprets this move as GM’s preparation to leave Korea. The labor union is claiming that GM Korea management intends to separate the design and R&D divisions from GM Korea and concentrate support on them, while making the uncompetitive current production corporation go on without its own R&D functions and ultimately shut down.
In particular, labor unions are expressing concern that the new corporation will not be allowed to succeed the collective bargaining agreement, which can give rise to massive layoffs. Under the current law, a newly founded corporation has no obligation to succeed the existing collective bargaining agreement. This is intended to allow the new corporation to implement restructuring whenever it wants.
The Korea Development Bank, which is the second largest shareholder of GM Korea, also opposes the spin-off. GM Korea directors recommended by the Korea Development Bank voted against it, but they failed to block the plan. GM Korea's board of directors is comprised of 10 directors – seven recommended by GM and three by the Korea Development Bank. The distribution is based on stakes. The Korea Development Bank has filed a petition with the Incheon District Court to ban GM Korea from holding a general shareholders meeting.
When the labor-management conflict showed a sign of intensifying, Kaher Kazem, president of GM Korea stepped forward to address it. "The establishment of GM Korea Technology Center Co. (tentative name) is an important step toward making our organization stronger. At the same time, the new company will create an opportunity to solidify our position by securing GM’s projects to develop global models," Kazem said in an e-mail to GM Korea employees on October 15, the eve of the voting day. "The establishment of GM Korea Technical Center Co. and the additional investment of US$50 million in the Bupyeong Plant will serve as a catalyst for Korean GM's growth in the global automotive industry where competition is intensifying. We must work together as a team to make GM Korea a stronger and more competitive company."
The labor union will be able to walk off lawfully if the Central Labor Relations Committee decides to suspend mediation on October 22. Considering the difference between GM Korea labor and management, it is highly likely that the decision to stop mediation will be made. Criticism is spreading as less than half a year has passed since the Korean government and GM Headquarters in the U.S. decided to inject US$4.35 billion into GM Korea.