GM Korea Yanks U.S. Execs, Slashes Local Staff

In a sign of potentially heightening discord between stakeholders in the restructuring of GM Korea, the unit will send home half of its 36 senior executives, most of them American, and slash hundreds of other executives and team leaders, WardsAuto has learned.

The company’s 50 executives in the managing director level or above will be reduced to around 32 positions. In Korea managing director is a middle management position.

The company’s hundreds of managers and team leaders face a 20% staffing reduction. The employees would not necessarily lose their jobs, but would revert to lower-paid jobs as part of a management shuffle within the broader restructuring.

Sources estimate the number of managers and leaders affected would be roughly 200.

The employees who are potentially affected were notified in a general letter.

The staffing moves are the latest tactic by the unit’s Detroit-based parent General Motors, which is conducting an estimated 3 trillion won ($2.8 billion) overhaul of its operations on the peninsula to return it to profitability. GM Korea’s domestic sales, as well as its important export business, are slumping badly and the automaker says manufacturing costs are too high. GM Korea earlier this month announced it would shutter one assembly plant in the country.

“Clearly, Korea is a challenge for us,” GM Chairman and CEO Mary Barra told investors in a conference call earlier this month. “But the current cost structure has become challenging and we are going to have to take actions going forward to have a viable business.”

The restructuring occurs against a politically charged backdrop, where the company, a key joint-venture partner, powerful labor unions, local banks and the government each have significant interests at stake.

The general letter says the staffing actions will be taken immediately. No individual notifications have been made and a specific timeline for the reductions and job changes is unclear.

In a second letter, GM Korea management urges salaried staff and hourly workers to consider a voluntary separation package offered some weeks ago. It expires on Friday.

The separation package provides salaried or hourly workers with three years’ pay, college tuition assistance for family members and a certificate worth up to 10 million won ($9,300) that can be applied toward the purchase of a new Chevrolet.

Union officials have complained about highly paid American executives holding jobs that could be handled by Koreans.

Sources believe GM Korea will announce more specific executive and management changes soon.

– with James M. Amend