Production Shift, Cutbacks at Issue in GM Korea Talks

GM Korea enters talks for a new contract with its workers later this month in a contentious atmosphere, partially caused by GM Chairman Dan Akerson’s comments that he would consider moving production out of South Korea if tensions on the Korean peninsula should worsen.

A source at the GM Korea branch of the Korea Metalworkers Union tells WardsAuto he considers the comments a veiled threat to intimidate workers during the negotiations by tacitly suggesting the auto maker may have a plan to shutter Korean operations and eliminate jobs.

“His (Akerson’s) comments came in a quite unexpected way, because we Koreans don't consider the current situation between the two Koreas particularly bad,” the union source notes. “We have lived with the North Korean threats for the last 60 years.”

Asked if union officials think GM might actually have a strategy in place for moving its operations out of Korea, the source says, “It is obvious that GM never rules out the option of moving production overseas, which, we think, is the fundamental source of the bargaining power on their side.”

Seeking guarantees that GM will keep production operations in Korea is a continuous pursuit for the union, but always a bargaining sore spot.

“We have always wanted to have those guarantees, but GM hardly shows future commitment regarding production without equivalent concessions from the union, and we don't have any intention to make such a concession in the upcoming wage negotiations,” the source says.

The union already is bristling at GM Korea’s production stoppages for the past two months at its plant in Gunsan. The curtailments have significantly reduced working hours and cut deeply into workers’ pay.

“Gunsan workers will work only 11 days on two 8-hour shifts out of 20 working days in April,” the union source says. “As for the non-working days, they are compensated to some extent, but the compensation is not even close to what is called full payment.”

A GM Korea spokesman confirms about 2,500 workers at Gunsan will be idled for nine days in April, following a similar 6-day production halt in March. The cutbacks are necessary “because demand has declined in overseas markets, such as Europe, one of GM Korea’s major markets, due to the worsening economic crisis.”

Workers in April will receive about 70% of their regular wages for the month, the spokesman says.

While the Gunsan plant last year built an average of about 17,000 vehicles a month, the 6-day production halt in March reduced output for the month to about 14,000 units.

The GM Korea spokesman says the auto maker “uses a flexible manufacturing system to control our inventory,” but he declines to state the auto maker’s April production target.

Gunsan has capacity to manufacture 270,000 vehicles annually. It produces the Chevrolet Cruze and Orlando, which are marketed globally, as well as the older-model Lacetti, which is still sold in selected export markets.

Asked if the production cuts would extend beyond April, or whether they were in place at other GM Korea plants, the spokesman says, “We are always evaluating how we can maximize our global products and flexible manufacturing system to optimize our production.”