General Motors’ South Korean division is planning to increase its engine production output tally, introducing another production shift, according to the company’s local union.
The expansion is also seen as a way to reduce building tensions between the workers and company management as the automaker has been introducing new strategies to lower operating costs and South Korea is known for its feisty unions. General Motors, the largest US automaker and the third biggest in the world has said that over the past half a decade its labor costs in South Korea have jumped almost 50 percent, impairing the competitiveness of its Korean operations – though union activists have often said they would go to “war” if the company lowers local production. Accounting for almost 20 percent of the automaker’s worldwide production output, South Korea is one of GM’s crucial Asian production hubs.
The new engines to be produced in South Korea would be used by the Equinox sport utility vehicles for export to North America starting with 2016, according to the union. Initial output will be of 45,000 engines at one of its lines in Bupyeong starting next year, with total production scheduled at 120,000 units per year. But the new production announcement has not considered another second line in Bupyeong, which currently produces Malibu sedans and Captiva sport utility vehicles and is seriously underutilized. The automaker also announced through GM Korea’s annual wage agreement last year that its upcoming generation of the Chevrolet Cruze would be made in South Korea after 2017.