GM union, management clash over service center sell-off

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GM union, management clash over service center sell-off

Published: 29 May. 2025, 20:12 Updated: 30 May. 2025, 14:40

Audio report: written by reporters, read by AI

The main gate of GM Korea’s plant in Bupyeong District, Incheon. The company announced cost-cutting measures, including the sale of its company-run service centers and idle land at the Bupyeong site, on May 28. [JOONGANG ILBO]

GM Korea’s decision to sell off company-run service centers and idle factory land has reignited concerns about the automaker’s long-term presence in the country. The company insists the move will not affect planned production activities, but employees are expressing deep unease.

On Thursday, GM Korea's labor union and management engaged in their first round of wage negotiations for 2025 at the automaker’s plant in Bupyeong District, Incheon. The announcement — made to all employees the day before — regarding the phased sale of nine company-owned service centers and idle land at the Bupyeong plant, became a flashpoint.

The JoongAng Ilbo found that the following exchange took place between the union and GM Korea CEO Hector Villarreal.

“Selling off company-run service centers sounds like you're exiting the domestic market,” the union said. Villarreal replied that GM Korea was not pulling out, but was selling underperforming operations and unused land, which would not affect ongoing production.

When the union asked when the GM headquarters had made this decision, Villarreal replied that it was after thorough discussions and that the union had been notified as soon as possible.

“We will not proceed with talks unless the company presents a future strategy,” the union said.

The two sides ended the first round without narrowing their differences.

GM Korea CEO Hector Villarreal speaks during a launch event for the all-new Cadillac Escalade at the Ivex Studio in Gwangmyeong, Gyeonggi, on April 16. [YONHAP

“GM Korea is the only local automaker with no road map for transitioning to future vehicles, which poses a serious threat to long-term job security,” Ahn Kyu-baek, head of the GM Korea's union, told the JoongAng Ilbo. “Dropping the asset sale announcement without a future plan is like dropping a bomb.”

When GM Korea shut down its Gunsan, North Jeolla, plant in 2018, it received 800 billion won ($582 million) in public funds in exchange for a pledge to maintain its operations in Korea for the following 10 years. Now, with the end of that commitment period — late 2027 — approaching, the company is moving to sell off assets. GM Korea had previously attempted to sell its company-run service centers in 2018 as well.

GM Korea operates nine company-run service centers across the country, including Seoul; Busan; Incheon; Daejeon; Gwangju; Jeonju, North Jeolla; and Wonju, Gangwon. All are certified as first-class repair centers offering full maintenance services. Last year, the company built a new facility in Yangpyeong, western Seoul, and is expanding its East Seoul location — both of which are now being put up for sale.

“Because first-class service centers require local government approval, they are highly valued by Chinese automakers looking to expand in Korea,” said Lee Ho-geun, an automotive engineering professor at Daeduk University. “The sale indicates that GM Korea no longer aims to grow its domestic sales.”

The company has set its 2024 domestic sales target at 18,000 vehicles — a 28 percent drop from last year’s 24,824 units.

The Chevrolet TrailBlazer [GM KOREA]

GM Korea plans to shift repair services to its 368 partner maintenance shops, including 56 first-class repair centers, with existing service center staff to be reassigned to the Bupyeong plant and other sites.

“Due to the presence of a repair union, labor costs at company-run service centers are high,” said Kwon Yong-joo, professor of automotive and transportation design at Kookmin University. “The decision to sell them appears to be aimed at cutting losses.”

According to the Korea Automobile & Mobility Association, of the 499,559 vehicles GM Korea produced and sold last year, 418,792 — or 83.8 percent — were exported to the United States. These included two SUV models — the Trax Crossover and TrailBlazer — manufactured at the Bupyeong and Changwon, South Gyeongsang, plants.

The TrailBlazer launched in North America in 2020, followed by the Trax Crossover in 2023, but it is likely that sales of both models will decline in the next few years. A drop in U.S. export volume could diminish the role of GM Korea’s Bupyeong and Changwon plants as production bases.

To address this, labor and management are negotiating plans to produce minor change models of four models — the Buick Envista, Buick Encore GX, Trax Crossover and TrailBlazer — at the Bupyeong and Changwon plants after 2027.

Still, structural challenges remain. Both plants are equipped only to produce internal combustion engine vehicles at a time when the global auto industry is shifting rapidly toward electric and hybrid models.

“Without electric vehicle production capacity, these plants will inevitably lose strategic value in the long term,” said Lee Hang-koo, an adviser at the Korea Automotive Technology Institute. “Transitioning to future vehicles is directly tied to the job security of GM Korea’s 10,000 employees and presents a major policy challenge for the incoming administration.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYO-SEONG, OH SAM-GWON [[email protected]]