April 20, 2024

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[THE INVESTOR] Amid continued uncertainty surrounding the fate of GM Korea, a report on March 15 showed that the automaker achieved the highest productivity per worker, despite staying in the red, countering the company’s argument that its poor performance was due to high operating and labor costs.

GM Korea and its second-biggest shareholder Korea Development Bank officially started due diligence this week, following the headquarters’ decision to shut down one of its plants in the country.

In a report released on March 15, Oh Il-sun, head of the Korea CXO Institute, highlighted that despite the highest productivity per worker at GM Korea in 2012, the company had posted losses, casting doubts over the headquarters’ management.

Revenue per worker at GM Korea was 930.2 million won ($873,000) in 2012, its best performance from 2010 to 2016 and the highest among five local automakers, according to Oh’s report put together based on results of GM’s 2016 audit.

Employees at Kia Motors had raised 855 million won per person in 2012, and Hyundai Motor posted 721.4 million won in revenue per worker.

Labor costs to revenue dropped to the lowest mark of 8.4 percent in 2012.

Despite high productivity and low labor costs, GM Korea‘s operating losses totaled 340.3 billion won, the report said.

GM has argued that high operating and labor costs had exacerbated losses here.

Echoing GM‘s perspective, some had cited the low labor productivity of GM Korea as a reason behind the shutdown of the Gunsan, North Jeolla Province, plant in mid-February. They had based that on a Harbour Report that ranked the Gunsan plant No. 130 in productivity out of 148 automobile manufacturing factories surveyed.

“One thing is for sure. High labor costs and low productivity of GM Korea employees did not show correlation with the company’s losses. There’s a problem in the company’s business portfolio,” said Oh.

“Under a normally functioning management, GM Korea should have seen a turnaround in 2012. It can be said that other reasons have caused the company’s operating loss, which KDB and GM needs to get down to through inspection.”

Whether GM headquarters had charged excessive material costs for complete knockdowns assembled at Gunsan, and sold them to other affiliates at a cheap price, will be the focus of the inspection, KDB said.

By Kim Bo-gyung/The Korea Herald (lisakim425@heraldcorp.com)