GM Korea CEO Resigns Amid Tough Labor Talks, Declining Sales

In what may be an ominous sign for the future of GM Korea, CEO and Chairman James Kim resigns to take over fulltime duties as the paid chairman and CEO of the American Chamber of Commerce in Korea.

Kim, who will stay in his current job through Aug. 31, is leaving the automaker amid tense labor negotiations and while sales and profits continue to fall.

GM Korea released a terse, boilerplate announcement Monday evening in Seoul from GM International President Stefan Jacoby.

“We thank Jim for his contributions to GM Korea over the past two years,” Jacoby says. “He has been a tireless promoter of our company. Jim has driven domestic sales, helped build the equity of our brands, and reached out to our customers in new and innovative ways.”

The resignation announcement comes on the same day in which GM Korea reports a 21% drop in its June global sales, with 43,692 total vehicles sold.

Domestic deliveries were down a staggering 37% at 11,455 units. Exports declined 13%, with 33,237 units shipped.

For the first six months GM Korea’s global sales slid 9.3% to 278,988 units.

A GM Korea spokesman confirms management is deeply into labor negotiations with the GM Korea Branch of the Korean Metals Workers Union.

“We held the first round of wage negotiations on May 23 and so far have held a total of 11 rounds,” the spokesman says.

He notes the union is demanding a monthly wage increase of 154,843 won ($135) and an “incentive-pay demand of 500% of the basic wage" (five months’ pay).

The union is asking for much more than money, according to union sources. The list includes converting the current wage process from an hourly pay calculation to a monthly salary basis, making adjustments in work shifts by shortening hours and having an active voice in operational planning.

The change to a monthly pay system for workers would be costly. In the event of partial shutdowns, workers would receive full pay regardless of any decreased number of hours worked in a given month.

GM Korea has sent out a letter from Kim and his senior managers urging union members to drop the non-wage matters and focus on wages so that the talks can be concluded.

Meeting agreement on a satisfactory wage increase without the other meeting the non-wage demands may even prove difficult for GM Korea. The company had a net loss of 631.4 billion won ($550 million) last year. For the past three years operating losses have totaled 1.97 trillion won ($1.72 billion).

The letter to workers referenced GM’s decision to sell its Opel operations in Europe.

“Opel sales will have both a direct and indirect impact on all of GM’s global businesses, including GM Korea, in their production levels and in new car planning.

“GM, based on profitability and business potential is reorganizing the business structure. Opel is one example. GM is re-evaluating supply levels and product plans from all of its businesses.

“Because of the uncertainties, requests considering changes in the 2-shift system and the change to a monthly payment system will not be taken forward for further negotiation. Nonetheless, GM Korea management will put our best efforts into securing a production portfolio and enough volume so that the company’s capacity can be optimally increased.”

The union in June asked for government mediation in the talks. It is necessary to apply for mediation before a union can call a strike in Korea, something which many analysts expect to happen.

Kim joined GM Korea as a newcomer to the automotive industry in June 2015 as chief operating officer. He was promoted to CEO in January 2016, after six months spent in learning all facets of the business.

Prior to joining GM Korea he was country manager and CEO of Microsoft Korea. A popular figure in Korean business circles, Kim had been the non-paid president of the American Chamber of Commerce in Korea since 2014. He continued his intense work with the lobbying group throughout his 2-year career with GM Korea.

Most recently he led a “door-knock” mission to the U.S. to talk up the mutual benefits of the Korea-U.S. Free Trade Agreement and try to counter anticipated negative actions to annul or renegotiate it by the Trump Admin.

No replacement for Kim at GM Korea has been announced.