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GM chief visits Assembly as government faces dilemma

GM International President says two new models to be released in Bupyeong and Changwon plants

The General Motors debacle over the shutting down of a plant in South Korea officially turned political Tuesday, with GM International President Barry Engle’s visit to the National Assembly urging for the government’s support.

Engle’s visit came as tension escalated in the labor sector, with the hard-line Korean Confederation of Trade Unions announcing it would hold a rally near Cheong Wa Dae next week in protest of the shutdown of the plant in Gunsan, North Jeolla Province.

Engle started the visit by holding a closed-door meeting with Rep. Hong Young-pyo of the ruling Democratic Party of Korea, who is head of the environment and labor committee. Engle also met with 10 ruling and opposition lawmakers reportedly to seek financial support from the government.

During the meeting, Engle said GM Korea will produce two new cars at its plants in Bupyeong, Incheon, and Changwon, South Gyeongsang Province, according to lawmakers who attended the meeting. He reportedly did not say whether the investment was being made based on the condition of the Korean government’s support.

In an answer to questions from reporters at the venue, Engle said, “It is our preference to stay here in Korea and to fix the business and make it a healthy environment. In order to do that, there is a turnaround plan that we have developed. And that plan includes significant investments, the new products. It also includes restructuring activities. Our desire is to work together with all the stakeholders to find a way to be able to fix the business.”

As for the turnaround plan for GM Korea’s losses of around 3 trillion won ($2.7 billion), the GM International chief said, “The plan includes significant investments, the new products. It also includes restructuring activities.”

During the meetings with the politicians, Engle was quoted as saying that as for the Gunsan plant, the firm was to make sure to minimize the damages.

GM International President Barry Engle (center) and GM Korea President Kaher Kazem (left) (Yonhap)
GM International President Barry Engle (center) and GM Korea President Kaher Kazem (left) (Yonhap)
According to Engle, there are 22 partner firms and around 5,000 employees here and among them 500 will be affected. He added that the company was trying not to increase the figure and GM would welcome any entity with designs on taking over the plant.

There is also an ongoing move for due diligence from a third party -- neither GM nor the Korea Development Bank -- to improve GM Korea’s transparency, he was quoted as saying by attending lawmakers.

GM Korea officials said they do not know how long Engle plans to stay or who he plans to meet with.

The Seoul government, meanwhile, found themselves further in a quagmire as the labor unions demanded influence in getting GM Korea to make further investments without the promise of government subsidies.

The KCTU warned it would stage an aggressive protest near the Blue House on Feb. 28 to call for the reversal of GM’s decision to close the Gunsan plant. The hard-line labor umbrella union that most automakers’ workers belong to, including GM, said, “GM should disclose management materials and return the money it has robbed by dumping losses generated overseas on GM Korea.”

“The government should not spend public funds on GM’s threat. GM should invest the money it has robbed from the Korean unit as capital to normalize the Gunsan plant.” It plans to stage an aggressive protest near the Blue House on Feb. 28.

GM Korea workers also met with Rep. Hong Young-pyo of the ruling Democratic Party and chief of a task force, calling for the government to receive the confirmation for capital investment and infrastructure investment from GM headquarters. It called for the GM headquarters to carry out a debt-to-equity conversion on intercompany loans amounting to 3 trillion won.

On Feb. 13 when GM announced the closure of the Gunsan plant, Engle said GM would decide its new car allocation by the end of this month based on government support. He has had met with government officials, Korea Development Bank, the GM Korea union and the Incheon mayor over the past three months to call for financial support and tax incentives.

Prime Minister Lee Nak-yeon acknowledged the gravity of the GM situation during a Cabinet meeting Tuesday. “GM decided to close Gunsan plant and the Trump administration is preparing to regulate steel imports. Korea appears to be driven into a difficult situation,” he said, adding, “What is important is public welfare and jobs, which are still in a difficult situation.” 

On Monday, Minister of Trade, Industry and Energy Paik Un-gyu told reporters, “GM should (first) address the management that has been opaque so far,” when asked about the possibility of the government support to GM Korea.

“They need to bring a long-term plan of how to improve the management and GM’s (investment) commitment,” he said.

“The negotiation between GM and the government is currently at the working level.”

By Shin Ji-hye (shinjh@heraldcorp.com)
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