GM Attracts Union Rage With Korea Plan image

GM’s Korean union criticized the automaker for its plan to transfer production from South Korea due to increasing tension.

Over the past weeks North Korea has threatened it will attack South Korea and the US and on Tuesday, it closed an industrial park operated with South Korea, located a few kilometers inside the border. GM, which has five plants in South Korea, made contingency plans for its workers’ safety there and announced it is ready to shift production from the region if tensions continue to increase.

“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.”

Although South Korea is one of GM’s biggest foreign manufacturing bases, it is no longer competitive due to the company’s fraught relationship with the trade union and also the increasing won currency. In November the company announced it will not build the new Cruze compact in this region, prompting speculation that GM will choose Europe to help its ailing Opel unit. GM said that labor risks is another reason to move production from South Korea, which is 70% dominated by domestic automakers Hyundai and Kia.

“If you look to the past 10 years, the cost of labor in Korea has increased too much. One of the few countries that has increased its labor costs higher than Korea is Spain for example. I don’t need to tell you what’s going on in Spain today right?” said Sergio Rocha, head of GM Korea.