GM Korea to hold board meeting court protection after talks breakdown with union

This graphic shows a Chevrolet vehicle facing a choice between rehabilitation on the left and court receivership on the right. (Yonhap)

SEOUL, April 20 (Yonhap) — GM Korea Co., the South Korean unit of General Motors Co., said it will hold a board meeting on Friday to make a decision on whether to file for court receivership, as talks with labor union made no headway.

In their latest negotiations held earlier in the day, the company conceded that no agreement was reached with its union on GM’s self-rescue package for its cash strapped local operations.

The union confirmed talks have “gone nowhere,” as workers cannot accept the self-rescue plan, which includes shutting down a plant, a wage freeze, no bonuses and the suspension of some benefits for workers.

“The company plans to hold a board meeting at around 8 p.m. and is likely to file for court protection as it failed to find common ground over the restructuring plans for its Korean unit,” a company official told Yonhap News Agency.

Late last week, GM President Dan Ammann told a media outlet, “Our preferred path remains to find a successful outcome here. It’s the right thing for all the stakeholders. But everybody has got to come to the table by next Friday.”

In February, the Detroit-based carmaker said it will shut one of its four car assembly plants in the country by May, while asking GM Korea workers to make some wage concessions and the Korean government to extend a financial helping hand to put the loss-making Korean unit back on track.

The state-run Korea Development Bank (KDB), the second-largest shareholder with a 17 percent stake in GM Korea, has said it could inject about 500 billion won (US$470 million) into the Korean unit if it finds the results of due diligence on the unit satisfactory.

The sum the KDB said it can foot is equivalent to 17 percent of the $2.8 billion GM pledged in February to invest in its Korean operations. GM holds a 77 percent stake in GM Korea and SAIC Motor Corp. owns a six percent stake in the unit.

As for the relocation of workers at the Gunsan plant due to be closed next month, the company and its union were unable to narrow their differences. GM Korea offered to transfer some of the remaining 680 Gunsan workers to other plants but the union refused to accept the plan.

Some 2,600 employees out of GM Korea’s total workforce of 26,000 have filed for voluntary retirement, as GM has stepped up the restructuring of its Korean unit.

GM Korea, meanwhile, said it restarted talks with union representatives at 1:00 p.m. in a last-minute effort to avoid being placed under court protection.

“Even if the board approves GM Korea’s plan for bankruptcy protection, the company and the union could continue talks for any breakthrough before actually filing for it,” the official said, adding that such talks could take place over the weekend.