THE KOREA ECONOMIC DAILY, GLOBAL EDITION

GM Korea Co., the South Korean unit of US auto giant General Motors Co., faces growing disruptions to its vehicle production, overshadowed by a protracted labor strike over wage increases.

If the work disruption continues at the current pace, the Korean unit may fail to meet its annual sales target, which could also hurt Korea’s total car exports this year, analysts said.

According to data obtained by The Korea Economic Daily, unionized workers at GM Korea have stopped overtime work since July 1 and began a partial strike on July 8, leading to 11,130 units in production loss during the first 14 days of this month.

Sources said the GM Korea union is determined to continue its partial strike until management offers a “satisfactory” proposal – a move that could lead to over 20,000 units in production loss for this month alone.

Unionized workers are said to demand a basic pay increase and a performance bonus amounting to 15% of GM Korea’s 2023 net profit of 1.5 trillion won ($1 billion).

THIS YEAR’S SALES TARGET

GM Korea, the largest foreign corporate investor in the Asian country, has set this year’s sales target at 529,200 vehicles, up 13% from last year’s 468,059 units, based on expectations for rising demand from North America.

However, the Korean subsidiary of the Detroit auto giant has seen its operations disrupted for half a month as wage negotiations failed.

Once rumored to be pulling out of Korea due to weak sales, GM Korea saw its sales rise to an all-time high of 13.73 trillion won last year, up 52% from the previous year. Its 2023 operating profit soared 388% to 1.35 trillion won, buoyed by strong exports of its two flagship SUV models – the Trailblazer and the Chevrolet Trax Crossover.

After years of bleeding, GM, the US headquarters, worked out a business normalization plan after consultations with the Korean government in 2018, including selling its Gunsan plant.

Currently, GM holds 76% of GM Korea while the state-run Korea Development Bank has a 17% stake as its second-largest shareholder.

GM has three plants in Korea – two production lines in Bupyeong, west of Seoul, one in Changwon, South Gyeongsang Province, and another in Boryeong, South Chungcheong Province.

Most of the vehicles made by GM Korea are exported with some models sold in Korea under the Chevrolet brand.

GM KOREA PLAYS KEY ROLE IN KOREA’S CAR EXPORTS

GM Korea is playing a key role in Korea’s vehicle exports.

According to the Korea Automobile & Mobility Association (KAMA), the Trax Crossover, produced at GM Korea’s Changwon plant, topped the list of Korea’s vehicle exports last year with 216,833 units, overtaking perennial export leader Hyundai Motor Co.’s Kona SUV, which posted exports of 212,489 units.

The Trailblazer manufactured at GM Korea’s Bupyeong plant ranked second with 214,048 units in 2023.

In the first half of this year, GM Korea’s domestic sales declined 29.1% year-on-year to 13,457 units, while exports rose 31% to 256,000 vehicles, resulting in a 25.7% increase in total sales.

Exports accounted for 95% of GM Korea’s total sales in the first half.

Industry officials said a continued labor strike will likely negatively affect Korea’s vehicle exports.

“GM Korea’s production disruption is not just a problem for the company alone. It will also have a significant impact on Korean automobile exports,” said an industry official.

In the first half, Korea’s vehicle exports rose 3.8% from the year-earlier period to a record $37.1 billion.

GM Korea makes up some 20% of Korea’s automobile exports.

Industry watchers said GM Korea’s 273 auto parts suppliers could also suffer if the labor action is protracted.

“We are worried that the GM Korea strike will lead to job losses as some suppliers are already suffering from a liquidity problem,” said Moon Seung, the CEO of Dasung Co. and chief of GM Korea parts suppliers association.

Write to Jung-Eun Shin at newyearis@hankyung.com
In-Soo Nam edited this article.