April 26, 2024

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[THE INVESTOR] The General Motors debacle over the shutting down of its plant in South Korea officially turned political on Feb. 20 with GM International President Barry Engle’s visit to the National Assembly urging for Seoul government’s support.

Engle’s visit came as tension escalated in the labor sector, with the hardline Korean Confederation of Trade Unions announcing it will hold a rally near the presidential office of Cheong Wa Dae next week in protest.

Engle started the visit by holding a closed-door meeting with Rep. Hong Young-pyo of the ruling Democratic Party and head of the environment and labor committee. Engle also met with 10 lawmakers from the ruling and opposition parties reportedly to seek financial support from the government. He reportedly started off the meetings by commenting that GM wished to stay in Korea and sort the problems out.

During the meeting, Engle said GM Korea will produce two new cars at Bupyeong and Changwon plants, according to lawmakers who attended the meeting. He reportedly did not say whether the investment is made based on the condition of the Korean government support.

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

KCTU warned it would stage an aggressive protest near the Blue House on Feb. 28 to call for the withdrawal of GM’s decision to close the Gunsan plant. The hard-line labor umbrella union that most automakers’ workers belong to including GM union 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 taskforce, calling for the government to receive the confirmation for capital investment and infrastructure investment from GM headquarters. It also called for GM headquarters to carry out debt to equity conversion on intercompany loans amounting 3 trillion won (US$2.7 billion).

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

Prime Minister Lee Nak-yeon acknowledged the gravity of the GM situation during a Cabinet meeting on Feb. 20. “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 Feb. 19, 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 but added, “The negotiation between GM and the government are currently in the works at the working level.”

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)