The board of GM Korea Co., the South Korean unit of General Motors Co., will decide whether to file for court protection next week while it makes a last ditch effort to reach an agreement with its union on restructuring measures, the carmaker said Friday.
GM Korea's board of directors was widely expected to approve the bankruptcy protection this week, but it opted to delay making a decision until its meeting Monday.
The sudden twist comes after Finance Minister Kim Dong-yeon called on the company and its union to find common ground through a "swift but sincere dialogue" on self-rescue measures that include shutting down a plant, a wage freeze, giving up bonuses and the suspension of some work benefits.
|This graphic shows a Chevrolet vehicle facing a choice between rehabilitation on the left and court receivership on the right. (Yonhap)|
Kim also said their failure in reaching an agreement over the restructuring plan will directly threaten 14,000 jobs at GM Korea and 140,000 other posts at subcontractors.
He urged GM solidify a mid- to long-term investment plan for the Korean unit and called on the union to share the burden of cost-cutting efforts.
On the subject of the impasse, GM President Dan Ammann told a media outlet April 13 that a good outcome is possible.
"The 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."
"We will continue negotiations with the company until Monday afternoon, as we believe the company will come up with a revised wage offer in order not to come under court receivership," a union spokesman said over the phone.
Government officials will engage in negotiations over the weekend in an effort to help reach a tentative labor agreement between the company and the union by 5 p.m. Monday, GM Korea said in a statement.
If the two sides reach a breakthrough over the self-help plan before the board meeting takes place on Monday, GM Korea's directors won't need to meet at the company's main plant in Bupyeong, just west of Seoul, the company said.
In February, GM said it will shut one of its four car assembly plants in Korea by the end of May, while asking GM Korea workers to make some wage concessions and the Korean government to extend a financial helping hand to put the Korean unit back on track.
The Detroit-based carmaker proposed converting $2.7 billion debt owed to it by GM Korea into equity and offered to share an investment of $2.8 billion between GM Korea and the state-run Korea Development Bank (KDB). It also suggested allocating two new vehicles to Korean plants.
The KDB, whose 17 percent stake in GM Korea makes it the second-largest shareholder, has said it could inject about 500 billion won (US$470 million), or 17 percent of the $2.8 billion, into the Korean unit if it finds the results of due diligence on the unit satisfactory.
GM holds a 77 percent stake in GM Korea and SAIC Motor Corp. owns a six percent stake in it.
What caused Friday's talks to fall through was the issue of relocating 680 workers from the Gunsan plant, which is due to be closed next month. The company offered to transfer a certain number of them 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 the Detroit carmaker has stepped up the restructuring of its Korean unit.
In the three years through 2016, GM Korea posted 1.974 trillion won in accumulated net losses due to a lack of new models and lower demand. (Yonhap)
Kim Jung-mi email@example.com
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