The chief executive officer of GM Korea Co. has called on its labor union to conclude ongoing wage negotiations by the end of March to help turn around the ailing carmaker, industry sources said Thursday.
GM Korea and its labor union have made little progress in the wage talks deemed crucial to the normalization of the automaker, which is on the brink of bankruptcy due to ballooning losses.
The company demands that the trade union accept a wage freeze and no bonuses as part of efforts to cut costs and help the firm stay afloat. Unionized workers insist that they can only accept the wage freeze and no bonuses on the condition that General Motors Co. withdraws its plan to shutter one of its four plants here.
In an email to employees on Wednesday, GM Korea President and CEO Kaher Kazem said it will be impossible to secure additional funds to cover cost payments in April unless labor and management reach a wage agreement by the end of March, according to the sources.
The company and the labor union must reach a tentative wage agreement by the end of March to show creditors and major shareholders the will to maintain the company's sustainability, he emphasized, adding that now is the time to act and that the firm's future hinges on the outcome of the wage talks.
|GM Korea President and CEO Kaher Kazem (Yonhap)|
Creditors, led by the state-run Korea Development Bank (KDB), want the two sides to reach an agreement on a self-help plan by April 20 in return for financial support. Its parent GM has also said it can inject fresh capital into GM Korea only if the union accepts the wage offer.
GM Korea needs an estimated 600 billion won (US$561 million) by the end of April to cover severance payments and other expenses. Some 2,600 employees recently applied for voluntary retirement in exchange for severance pay and cash payments equivalent to years of salary, the company said.
Kazem stressed that GM, the KDB and other shareholders of GM Korea will not provide financial support without clear and active participation by all the parties involved.
The CEO reiterated the company's stance that GM has plans to allocate the production of new vehicles to its Korean plants and make new investments in them only if all parties, including the labor union, participate in pain-sharing.
In February, GM announced its plan to close its plant in Gunsan, about 270 kilometers south of Seoul, citing low productivity.
GM has the biggest stake in GM Korea with 77 percent. The KDB is the second-biggest shareholder with 17 percent, and SAIC Motor Corp. owns 6 percent. PricewaterhouseCoopers is currently conducting due diligence on GM's Korean operations on behalf of the KDB, with the aim of completing the review by the end of April.
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