General Motors has said its labour costs in South Korea have risen nearly 50% over the past five years but it does not plan to shut any of its four plants where it makes nearly 20% of its global output.
Reuters noted that GM earlier this year said it plans to end production in Indonesia and cut operations in Thailand as part of broader restructuring, fuelling analyst expectations about reduction in South Korea, where it has commented on labour costs and unstable industrial relations.
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“Never say never, OK? But we are not saying that we have any plans to shut down any operations here,” Sergio Rocha, GM Korea chief executive, said in an interview with Reuters at the Seoul motor show.
“It is very important for Korea Inc to make sure that we address the competitiveness of our labour costs, which are spiking to certain levels, that may impact our sustainability.”
GM classifies South Korea as one of its “high-cost” countries, Rocha said. The country’s biggest automaker, Hyundai Motor, endures pay-related strikes almost on an annual basis and is currently in talks with its union about the way it pays workers.
“I have no doubt that something needs to be done in ‘pali pali’ to address labour costs,” the Brazilian-born Rocha said, using a Korean phrase for “quickly, quickly”.
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By GlobalDataReuters noted GM’s Korean factories have had a troubled 18 months. At the end of 2013, the automaker said it would stop European sales of Chevrolet brand cars by the end of 2015, most of which are shipped to the continent from Korea.
As a result, GM said it would reduce its Korean staff and shuffle production. The union, fearing plant closure, blocked the restructuring, leaving two plants underused.
Rocha said GM Korea is offsetting nearly one third of its European export losses by shipping Trax crossovers to the US.
He also said an announcement last month to make the next generation Cruze compact in Mexico would not change its plan to produce the car in Korea.
As part of GM Korea’s annual wage deal last year, when it avoided the usual strike, the carmaker agreed to build the revamped Cruze in Korea from 2017, the news agency report said.
