GM Korea must learn from KumhoKumho Tire has been given a second chance after teetering on the brink of insolvency. The country’s second-largest tire maker avoided collapse, despite the government’s refusal to offer a bailout, which it has given in the past to other large companies.
Finance Minsiter Kim Dong-yeon presided over a cabinet meeting on Friday — Kumho’s deadline for a voluntary debt workout or moratorium — to give a final warning to the company’s union that it is heading to bankruptcy court if it resists a planned sale to Chinese bidder Doublestar. When faced with a dead end, the militant union gave in. It invited union members to vote on the sale proposal, which resulted in a majority choosing the sale over liquidation.
The union has taken the right path, paving the way for Kumho’s survival through the injection of foreign capital. Had it not agreed to the restructuring proposal set out by creditors, the company would have to begin court bankruptcy procedures. Under court management, 30 to 40 percent of the workers could have lost their jobs. The company also might have been liquidated.
Their last-minute choice was bringing in immediate capital from Doublestar, which saved jobs and will help revive the tire maker. Kumho’s creditors also said they would put up 200 billion won ($189.5 million) in new funding.
GM Korea is in a similar situation, and should learn from Kumho’s choice. Due to its stubborn union, the company passed the March 31 deadline for collective bargaining settlement. If the union does not accept a restructuring deal, the Detroit-based company won’t be able to hand in a turnaround plan by April 20 to receive government aid. The government cannot stop GM from closing down its Korean operation. As Kumho Tire’s ordeal showed, there is nothing the government and politicians can do. GM Korea must first do its utmost to save itself. Otherwise, the automaker cannot expect any support from its shareholders.
JoongAng Ilbo, April 2, Page 30
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