GM Korea's contingency plan provokes union ahead of talks

Tue Apr 9, 2013 3:37am EDT
 
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By Hyunjoo Jin

SEOUL (Reuters) - General Motors Co has warned it could shift operations from South Korea in the longer term due to rising tension with the North, angering its Korean union which accuses the firm of using the instability as leverage ahead of tough annual labor talks.

North Korea has issued a stream of threats of war with South Korea and the United States in recent weeks, and on Tuesday it effectively shut down an industrial park operated with South Korea a few kilometers inside its border.

The rhetoric prompted GM Chief Executive Dan Akerson to say late last week that the company, which has four car manufacturing plants and one transmission factory in South Korea, was making contingency plans for employee safety there.

Akerson said it would be difficult to shift production from South Korea, but that the continued escalation of tensions on the Korean peninsula would cause the No.1 U.S. automaker to look at moving production long-term.

The comments also come as GM's Korean labor union, which staged the first strike in four years last year over a new shift system, is gearing up for annual wage negotiations and talks on a broader potential restructuring of its production system.

"It is a message by Akerson to the union saying 'don't make excessive demands'... They want to make the union feel jittery," Choi Jong-hak, a union spokesman, told Reuters. "It is a threat, as the labor union here is seen as a stumbling block for its restructuring of its global production system."

COMPETITIVE EDGE

South Korea is one of biggest overseas manufacturing bases for GM, producing more than four out of 10 Chevrolet vehicles sold globally, but it has been losing its competitive edge due to a fraught relationship with the trade union and a rising won currency, executives have said.   Continued...

 
Dan Akerson (C), Chairman and CEO of General Motors, attends the press conference for the Chevrolet Corvette Stingray at the North American International Auto Show in Detroit, Michigan January 14, 2013. REUTERS/Rebecca Cook