By on April 20, 2018

Image: General Motors

As April 20th dawns without a wage deal with its workforce, General Motors’ troubled Korean division could be well down the road to bankruptcy.

GM Korea, which recently announced the closure of an assembly plant amid a continued loss of sales and money, needed to reach a deal with its 16,000 workers by today’s date in order to gain assistance from the South Korean government. The division builds the Chevrolet Spark, Trax, and Buick Encore for U.S. customers. Since revealing its restructuring plan back in February, GM Korea failed to gain much-needed wage concessions from its aggressive labor union.

Without this, bankruptcy might be the only option, the automaker claims.

In an email to employees seen by Reuters, GM Korea chief executive Kaher Kazem wrote, “Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings.”

It’s a threat the division has used before, but it didn’t bring about the desired concessions. Instead, workers threatened to strike, then sacked the automaker’s executive offices. GM Korea needs to free up $600 million in operating funds in order to receive a government aid package, as the state-funded Korean Development Bank owns a 17 percent stake in the automaker.

Reuters reports that a decision to file for court-led rehabilitation was delayed until to Monday, and a union official claims both sides will continue talks until Monday afternoon. One of the sticking points involves job security for workers at the soon-to-be-shuttered Gunsan assembly plant.

“We don’t want a disaster,” a union official said as talks commenced. “We still have to keep in mind the worst situation.”

For GM Korea to go ahead with bankruptcy proceedings, it would first have to secure approval from 85 percent of its shareholders.

[Image: General Motors]

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7 Comments on “Making Trax for Bankruptcy? GM Korea Fails to Meet Wage Deal Deadline, Future Cloudier Than Ever...”

  • avatar

    What will happen to the Trash, I mean Trax, and the Encore, and the Spark? I guess they’d just move production to China?

    • 0 avatar

      “GM has five manufacturing facilities in South Korea”.

      We’re only talking possibly closing one of the five plants. Well at least so far. That’s the point, overcapacity is rearing its ugly head.

      Yes, GM Korea will still be able to deliver enervating Chevy Traxes and oh so cute upmarket Buick Encores to an adoring market.

      • 0 avatar

        we love our little Encore that i fleece, i mean lease, what’s that you say buy American lease Korean! seriously, no problems in 12k miles, drives and handles great, plenty of power even with the base 1.4 (for this old geezer anyway) once i figured out how to fold down the rear seats and the passenger seat, it made it a joy to haul things, not huge things but moderate size stuff! now with gas prices moving on up i’ll even love it more! just wished they would bring it stateside. our deceased president of Saturn, Skip LeFauve once stated back in the early 90’s that it wasn’t the Japanese he was worried about (they already had a hold of things) it was the Koreans! “they were here, they built junk, they were going to go back to the drawing board and come back fighting” they did!

  • avatar
    Trucky McTruckface

    I’m going to go ahead and assume that all the small car manufacturing and R&D work is going to move to China after the inevitable shutdown, as opposed to bringing them back to North America.

    It’s almost comical to watch GM’s international presence dwindle away to nothing. They’re one step closer to becoming a Chinese company that sells a few trucks and crossovers in the U.S.

  • avatar

    I guess they could not Spark interest or get customers to make Trax into the showroom? Maybe Daewoo doesn’t deserve an Encore? :D

    Burn, baby, burn.

    In the end, only Guangzhou Motors will be still standing.

  • avatar
    schmitt trigger

    28 cars:
    Either that, or Geely, or Great Wall, or……

    Your and Trucky’s posts are absolutely correct.

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