A top General Motors executive has reiterated persistent industrial unrest could drive it out of South Korea, just two years after it received a state backed rescue package to stay.
Workers have been staging two, four-hour strikes daily since 30 October as they demand an end to a wage freeze put in place after the 2018 deal that saved the Korean operations from bankruptcy and the strikes and other industrial action have cost the company 17,000 vehicles in lost production, a number that will hit 20,000 by the end of the week, Steve Kiefer, president of GM's international operations, told Reuters.
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That was on top of the 60,000 units lost earlier in the year as the novel coronavirus spread, making it likely GM Korea would not turn a profit this year unless it could recapture that output, he added.
"We're basically being held hostage in the short term by lack of vehicle production," Kiefer told the news agency. "That's having a very significant short-term financial impact."
The industrial action would "basically make it impossible for us to allocate any further investments or … new products to the country of Korea. It's making the country non-competitive," he told Reuters. "It is going to have long-term effects if we can't get this resolved in the coming weeks."
Reuters said GM builds 500,000 vehicles a year in South Korea, shipping many to the US including the popular Chevrolet Trailblazer SUV. The automaker employs about 12,000 people in the country.
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By GlobalDataThe two sides have failed to reach a deal after 24 rounds of negotiations.
While it would be hard to quit South Korea in the short term, the long-term future was in doubt, Kiefer told Reuters.
GM would abide by any past agreements, including plans to build a 2023 Chevrolet crossover in Korea, but even spending on that programme had been suspended due to the strikes.
"We would prefer to make this model work … but as of now, we're losing confidence that we're going to be able to continue to invest in that country," Kiefer told Reuters.
GM had other options in Asia including China, where it built nearly 5m vehicles a year, he said.
