Making Trax for Bankruptcy? GM Korea Fails to Meet Wage Deal Deadline, Future Cloudier Than Ever
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 r estructuring 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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- Dusterdude @El scotto , I'm aware of the history, I have been in the "working world" for close to 40 years with many of them being in automotive. We have to look at situation in the "big picture". Did UAW make concessions in past ? - yes. Do they deserve an increase now ? -yes . Is their pay increase reasonable given their current compensation package ? Not at all ! By the way - are the automotive CEO's overpaid - definitely! (That is the case in many industries, and a separate topic). As the auto industry slowly but surely moves to EV's , the "big 3" will need to be producing top quality competitive vehicles or they will not survive.
- Art_Vandelay “We skipped it because we didn’t think anyone would want to steal these things”-Hyundai
- El scotto Huge lumbering SUV? Check. Unknown name soon to be made popular by Tiktok ilk? Check. Scads of these showing up in school drop-off lines? Check. The only real over/under is if these will have as much cachet as Land Rovers themselves? A bespoken item had to be new at one time. Bonus "accepted by the right kind of people" points if EBFlex or Tassos disapproves.
- El scotto No, "brothers and sisters" are the core strength of the union. So you'll take less money and less benefits because "my company really needs helped out"? The UAW already did that with two-tier employees and concessions on their last contract.The Big 3 have never, ever locked out the UAW. The Big 3 have agreed to every collective bargaining agreement since WWII. Neither side will change.
- El scotto Never mind that that F-1 is a bigger circus than EBFlex and Tassos shopping together for their new BDSM outfits and personal lubricants. Also, the F1 rumor mill churns more than EBFlex's mind choosing a new Sharpie to make his next "Free Candy" sign for his white Ram work van. GM will spend a year or two learning how things work in F1. By the third or fourth year GM will have a competitive "F-1 LS" engine. After they win a race or two Ferrari will protest to highest F-1 authorities. Something not mentioned: Will GM get tens of millions of dollars from F-1? Ferrari gets 30 million a year as a participation trophy.