General Motors recently announced it has no plans to abandon the South Korean business operation even as it decided to exit the slumping Russia and regional operations quickly feared a similar result.
The largest US automaker and the third biggest in the world has already made several pull-out moves this decade: it decided to withdraw the Chevrolet brand from Europe, to cease its manufacturing operations in Australia and recently to almost completely abandon the Russian market. The automaker declared recently that its labor costs have surged almost 50 percent in just half a decade in South Korea, with the country building around 20 percent of its global vehicles, but it also said it’s not planning to close down any of the four factories it has there. The regional restructuring in Asia has already reached certain markets, though, with the carmaker announcing earlier this year it plans to shut down production in Indonesia and decrease its presence in Thailand – lifting analyst chatter about a similar move in South Korea. The US automaker there has been met with rising labor costs and generally unstable industrial relations.
“It is very important for Korea Inc to make sure that we address the competitiveness of our labor costs, which are spiking to certain levels, that may impact our sustainability,” commented Sergio Rocha, GM Korea chief executive in an interview during the Seoul Motor Show. GM has said South Korea is now one of its “high-cost” countries, and the country’s biggest carmaker has endured wage-related strikes almost every year.