GM Korea Union Threatens Strike Over Pay, Work Rules

GM Korea announces a 7.3% sales increase in June the same day its local branch of the Korea Metal Workers Union votes to authorize a strike over wages and workplace rules changes.

The union website shows slightly more than 70% of roughly 14,000 workers voted to strike Wednesday because of lack of progress in negotiations that began April 23. In addition to higher wages and revamped work rules, the KMWU is demanding a voice in allocation of production at GM Korea facilities.

There have been 12 bargaining sessions held thus far. Under Korean labor law the National Labor Relations Commission can order a 10-day cooling-off period before the union can take strike action.

GM Korea spokesmen decline comment on the union vote, saying it expects both sides will seek a fair and equitable solution.

The union vote is a negative greeting for newly appointed chief operating officer James Kim, who has responsibility for labor relations as well as general operations.

A persuasive executive who earned much praise from Microsoft when he headed its Korean operations as CEO until last month, analysts believe he may be able to placate the union negotiators and forestall a strike.

The positive June sales result softened what otherwise was a rough first six months for GM Korea. The automaker sold 307,819 vehicles worldwide compared with first-half 2014, a drop of 5.9%.

In the domestic market first-half sales were off 1%. Car deliveries slipped 12.4% to 46,064, but the overall result was tempered by strong sales of SUVs and the liquid-petroluem-gas-powered Damas and Labos mini-commercial vehicles.

Among cars, the Spark sold 25,995 units, down by 15.3% year-on-year, the Aveo was off 31% with 1,350 and the fullsize Alpheon fell 22.5% to 1,954.

While SUV sales for the six months rose 5.5% to 18,991, the Chevrolet Orlando was the only one that showed an increase over the comparable 2014 period. Orlando deliveries climbed 5.9% to 9,035, and accounted for roughly half of the automaker’s domestic SUV sales.

It should be noted GM Korea’s export sales of complete knocked-down vehicles are important to production operations and its bottom line. CKD exports in the first six months totaled 437,991 units, far exceeding global sales of completely built-up vehicles, but were off 24.6% from 2014.

The union strike vote came as GM Korea was displaying the production version of its all-new ’16 Spark at a preview event in Seoul. The minicar goes on sale in Korea in August and President and CEO Sergio Rocha predicts it will help pull GM Korea out of its current doldrums.

Rocha says the Spark will “redefine the segment” and “accelerate our business in the country and further leverage the role of GM Korea with the GM global business.”

The minicar boasts new engines, a high-tensile-strength steel body and many high-tech control and convenience features. It will be exported globally to more than 140 markets.