Labor costs worry GM Korea

By Korea Herald

CEO vows to keep all jobs despite reduced production

  • Published : Mar 6, 2014 - 20:43
  • Updated : Mar 6, 2014 - 20:43
GM Korea declared that the biggest challenge of the year would be the wage negotiation with its labor union after the Supreme Court in 2013 ruled against many businessmen’s willingness to minimize the basic wage system.

However, the company will aggressively seek to balance competitiveness and sustainability in the market and keep the plants running, said Sergio Rocha, president and CEO of GM Korea, the South Korean unit of U.S. automotive giant General Motors.

“The main concern is how to address 2014 wage and collective bargaining agreement negotiations with our union,” Rocha said at a press conference on Thursday. 
GM Korea president and CEO Sergio Rocha poses in front of the new Chevrolet Malibu diesel model at a Seoul hotel on Thursday. (Yonhap)

Rocha’s remarks came as GM Korea unveiled a new Chevrolet Malibu diesel midsize sedan.

Rocha cited the country’s top court’s ruling in 2013 to include bonuses and other perks while calculating basic ordinary wages. The ruling was a hot potato outside Korea. Former GM chairman Dan Akerson earlier this year asked President Park Geun-hye to resolve the ordinary wage problem before GM makes any investment in Korea. There have been rumors that GM will shut down its business in Korea, despite constant denials from the management.

Mindful of the concerns, Rocha acknowledged that the court’s ruling triggers a labor cost increase for his company and that the situation wasn’t easy. “I am optimistic and positive, but we will have a very, very interesting time in front of us,” he said.

“Since this is new, the company management and the union leadership need to navigate both sides of competiveness and sustainability. Because, if you are not competitive, you are not sustainable,” he said in a rather stern manner.

GM Korea has recently decided to trim its production its Gunsan plant in North Jeolla Province by 35 percent. Onlookers claim that the reduction is likely to result in major restructuring, including layoffs of irregular workers.

Rocha said that the company would keep all the jobs and has signed an agreement with the local policymakers. “It is a sacrifice for the company but good for the company,” he said.

Separate from the wage issue, GM Korea unveiled its diesel-powered midsize Malibu, which it said promises class-leading driving characteristics and good fuel economy. The car sold under the Chevrolet badge sports a 2.0-liter Ecotec turbo diesel engine from Germany, paired with an optimized six-speed automatic transmission made by Aisin Seiki, one of the largest car parts makers in the world.

The new models, priced below 30 million won ($28,000), lower than an average diesel sedan, is optimal for long-distance driving, the company said. GM Korea expressed hopes to take on European, especially German, import cars that have expanded their market presence here.

By Bae Ji-sook (