GM will transfer operations out of South Korea due to North Korea tensions

Article by Christian Andrei, on April 12, 2013

Because of the increasing tension with the North Korea, it’s possible that General Motors Co. will transfer operations out of South Korea in the longer term. This plan upset its Korean union, which charges the company of exploiting this instability as leverage for the annual labor negotiations. In the past few weeks, North Korea has been threatening South Korea and the U.S. that it is prepared to go into war against them.

North Korea had recently closed an industrial park that it operated with South Korea a few kilometers within its border. Last week, GM CEO Dan Akerson felt the need to make contingency plans for its employees at its four car manufacturing plants and one transmission factory in South Korea.

Akerson said that it will be hard to transfer production from South Korea but that the worsening situation on the Korean peninsula has forced it to consider shifting production long-term. At the same time, GM is about to enter talks with the Korean labor union about its annual wages and a broader potential restructuring of its production system. In fact, the union had its first strike in four years last year over a new shift system.

Union spokesman Choi Jong-hak told Reuters that Akerson’s statement to not make excessive demands is a “threat” as he sees the labor union to be a “stumbling block for its restructuring of its global production system."

Executives said that South Korea is one of the largest overseas manufacturing bases for GM, offering more than four out of 10 Chevrolet vehicles sold worldwide. However, it has been losing its competitive edge because of a troubled relationship with the trade union and a won currency that’s on the rise.

Topics: gm, south korea

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