GM Korea Output Surges After Union OKs New Contract

GM Korea workers are back on the job this week following their weeklong summer shutdown, which began within hours after they ratified a new collective-bargaining agreement.

The auto maker canceled all interviews during the contract talks and declines to discuss details of the settlement or of its product plans. But union sources say workers are happy with the results of the negotiations, and every plant is running flat-out.

“We are operating 20 hours a day at all plants,” a source close to the union tells WardsAuto. “Every plant is running two 10-hour shifts of eight hours, plus two hours of overtime.”

That includes the Gunsan plant that produces the Chevrolet Cruze and Orlando, which had been operating below capacity because of slack demand.

Some analysts do not think the settlement was too costly to GM Korea. The union accepted an average 5% wage increase of 92,000 won ($82.50) per month and bonuses totaling 10 million won ($9,000).

Workers received a 4 million won ($3,600) signing bonus, which management terms a lump-sum payment, upon ratifying the new contract. The other 6 million won ($5,400) will be paid as a performance bonus at year’s end. While it is called a performance bonus, it is a fixed amount.

The source confirms that during negotiations GM Korea advised union representatives plans for introducing the all-new Aveo have been delayed. The small car had been scheduled for production and launch late in 2015 but now will debut sometime in 2016, he says.

The all-new Aveo will not be built in Korea and will not be available for sale in the domestic market. It will be produced as the Chevy Sonic in the U.S. and under a different name in China.

GM Korea will continue manufacturing the current and updated midcycle version of the Aveo for sale in Korea and in export markets, except the U.S. and China.

The next-generation Cruze will be produced and launched in late 2015 instead of late 2014, but it won’t be built in Korea either. The current version of the midsize sedan will remain in production for sale in Korea and some export markets.

The new Spark launches in first-half 2015 and will continue to be produced at the Changwon production center, located on Korea’s south coast a few miles west of Busan.

Turmoil and wrangling over production-line speeds and product plans for Bupyeong Plant 1 seem to have been resolved, the source says.

Line speed has been increased significantly and new workers added to meet global demand for the hot-selling Aveo and Chevrolet Traxx, Buick Encore and Opel Mokka cross/utility vehicles. However, the source says, demand exceeds the plant’s capacity, even with the speedup.

GM said earlier it was sending some Mokka output to Spain.

Even with the Mokka going to Spain, GM Korea workers will continue building some of its parts. “Spain cannot handle all of the production requirements and GM Korea will continue to build many parts and export them to Spain,” the source says.

Still of concern to the union is GM Korea management’s refusal to divulge its future production strategy. With the spectre of downsizing still hanging over the auto maker, management is divulging information only in limited bits and pieces.

“We are still very concerned about our future,” the source says. “Are they downsizing the company? Will they allocate new vehicles here to GM Korea? It’s all in the mystery box. It’s a chronic problem for us.”

A GM Korea spokesman tells WardsAuto, “We do not disclose production plans.”

However, management, with CEO Sergio Rocha present and in charge, did disclose plans for the Aveo, Cruze and Spark in a presentation to union officials of the GM Korea Branch of the Korea Metal Workers Union during negotiations.