GM Korea, deep in the red, fails to pay workers

Home > Business > Industry

print dictionary print

GM Korea, deep in the red, fails to pay workers

GM Korea missed the deadline today to make payments promised to its employees as the company’s financial situation continues to worsen.

The automaker agreed to pay 4.5 million won ($4,230) in incentives to each employee, for a total of 72 billion won, at its 2017 wage negotiations.

“GM Korea is facing a serious cash crisis, and in the absence of additional funding from our stakeholders, will not be able to meet all of our financial obligations in April,” said GM Korea CEO Kaher Kazem in an email on Thursday.

“Given the current financial difficulty of the company, regrettably at this time we are unable to make the second lump-sum payment from the 2017 wage agreement due tomorrow, April 6.”

On the same day, an association of Korean auto parts companies recognized by General Motors’ U.S. headquarters as Suppliers of the Year pleaded desperately for the company to resolve its financial issues and stay in the country.

The Korea Auto Industries Coop. Association said that if GM exited Korea, the chances of the Korean auto parts makers advancing abroad and developing global competitiveness would vanish.

“GM Korea acted as window for qualified auto parts makers to advance abroad,” said Ko Moon-soo, the executive director of the association, on Thursday at a press conference attended by 31 Korean companies honored by GM.

“If GM exits Korea, that window would be closed and we would lose critical opportunities to advance abroad and broaden our clients to other global carmakers,” Ko added.

Supplier of the Year is an annual award given by GM to auto parts suppliers who excel in their technology, cost, service and other areas.

GM selects 100 companies from its 20,000 global suppliers for the award, which both acknowledges their strength and gives them priority for orders for other auto parts.

According to Ko, an average of 25 percent of the awardees have been Korean companies since General Motors acquired Daewoo Motors in 2002.

The suppliers’ association called for a speedy resolution of GM Korea’s ongoing negotiations with its labor union, and called for more orders for cars as well as financial aid for the company.

“We plead to the government and Korea Development Bank that the current issue is not solely related to a single company, but is closely related to the collapse of an industry that has contributed so much to the Korea’s economy, the creation of jobs and the manufacturing and export business of an industry,” read a letter from the association.

“An immediate solution is to give financial aid to the company, which is mandatory [to prevent GM Korea’s exit],” the letter added.

The Korean companies honored by GM have taken advantage of the company’s international network to go on to win contracts from other global carmakers.

Kwon Oh-chul, head of window- and door-maker Kwangjin, said after it received the Supplier of the Year award, the company won contracts with Fiat Chrysler, Volkswagen and Honda, among others.

“General Motors is known to have high standards in selecting its global suppliers. The fact that we have been acknowledged as a superior member, among others, has given us a lot of privilege when discussing deals with other global carmakers,” Kwon said.

Kim Eun-hee, the vice president of Seoul Precision, an engine parts maker, said GM’s accolade won the company a new deal with Ford.

“Without GM in Korea, we will not be able to continue our business abroad and the huge investment we have done to further develop our parts-making will be of no use,” Kim said.

The Korean government designated Gunsan, North Jeolla, as an industrial crisis zone on Thursday to provide benefits and financial support to local workers and companies following GM’s decision to shut down its plants in the city.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)