GM chairman might visit Korean facility
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General Motors Chairman and CEO Mary Barra hinted at visiting Korea soon amid conflict over the spinning off of the Korean unit’s R&D division. If the trip happens, it would be Barra’s first visit to the Korean operations since she became chairman in 2016.
GM Korea head Kaher Kazem reiterated the company’s commitment to the market during a government audit held Monday. “I would like to visit our Korea operations at some point soon,” Barra wrote in a letter sent to labor union head Lim Han-taek on Oct. 24.
Lim had requested a meeting with Barra over GM’s decision to spin off the R&D division.
Since July, GM has been pushing to build a separate R&D center tentatively named GM Korea Technical Center. Management says it will raise work efficiency and competitiveness.
The labor union has opposed the idea, claiming a separate R&D center will eventually result in the ending of production in Korea, resulting in massive layoffs. On Oct. 19, the automaker approved the plan in a board meeting despite the opposition.
In the letter, Barra emphasized GM’s dedication to its Korean operations.
“The specialized unit will benefit from focused management, increased transparency on cost and improved operational efficiency,” Barra wrote in the letter.
“We think the demerger is an important step to allow both the engineering services company and the manufacturing unit to stand on their own as profitable, viable businesses.”
“The specialized unit will benefit from focused management, increased transparency on cost and improved operational efficiency,”
During a government audit held Monday at the National Assembly, GM Korea CEO Kazem said the company “has no plan to withdraw from Korea.” His comments assured lawmakers the spinoff is part of GM’s plan to stay in Korea longer than the initially promised 10 years.
“In fact, we are establishing a long-term commitment to GM Korea. [Building a separate R&D center enables] us to not only upgrade but also introduce new models. We are committed to building a very long-term future for GM Korea,” Kazem said. “The framework agreement says 10 years, but we are looking at longer than that.”
Kazem added that the company is engaging a number of parties on the possible redevelopment of the currently shut-down Gunsan factory, but he didn’t reveal details. He said he would “review” whether the plan for the Gunsan factory site could be included in the initial framework agreement.
GM abruptly shut down the Gunsan factory in May. GM Korea has since been beset by speculation of completely shutting down in the country.
The company and the Korean government have decided to jointly invest 7.7 trillion won ($6.7 billion) to save the ailing unit. GM also promised to stay in the country for the next 10 years.
A GM Korea official said that Barra’s visit to the country is not yet confirmed.
Questions & Answers
Q.What is the primary reason for the disagreement between GM and the labor union regarding the R&D division?
What is the primary reason for the disagreement between GM and the labor union regarding the R&D division?
GM management believes a separate R&D center will improve work efficiency and competitiveness. The labor union fears this will ultimately lead to the end of production in Korea and large-scale layoffs.
Q.What reassurances has GM provided about its commitment to its Korean operations?
What reassurances has GM provided about its commitment to its Korean operations?
GM Korea's head stated the company has no plan to withdraw and aims for a long-term commitment beyond the initially promised 10 years. Chairman Barra also emphasised dedication and explained the demerger benefits.
Q.What is the current status of the Gunsan factory mentioned in the article?
What is the current status of the Gunsan factory mentioned in the article?
The Gunsan factory was abruptly shut down by GM in May. GM Korea's CEO said the company is engaging parties on its possible redevelopment, but details were not revealed.
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