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GM Korea’s factory in Incheon’s Bupyeong District. (provided by GM Korea)

GM Korea is finding itself in another restructuring flap amid its previous woes with the closure of a Gunsan factory and large-scale voluntary retirements. With the General Motors headquarters moving to cut GM Korea’s R&D sector and create a separate corporation, the union has been up in arms over a plan it claims “shows the aim here is restructuring.”

In a July 24 press conference at GM Korea’s factory in Incheon’s Bupyeong neighborhood, the GM Korea chapter of the Korean Metal Workers’ Union (KMWU) expressed its “opportunity to the company’s recent plans to establish an independent corporation for the R&D sector.” The union views the corporations’ establishment as the first step toward further restructuring.

The union expressed “support for the new investment and increased export volumes for GM Korea announced recently by GM International president Barry Engle, which are welcome measures.”

“But we are definitely opposed to the establishment of an R&D corporation, which we see as another restructuring plot after the shutdown of the Gunsan factory,” it added.

Engle previously announced plans for the new corporation’s establishment on July 20, along with plans for US$50 million in new investments in GM Korea, an expansion in the Bupyeong plant’s facilities, increased export volumes, GM Korea’s designation as a base for development of next-generation compact SUVs, the hiring of 100 additional engineers, and the establishment of an Asia-Pacific regional headquarters in South Korea.

GM Korea explained that it “plans to establish a new corporation by the end of the year to focus on global product development efforts as part of the R&D investment.”

The union has viewed the new corporation’s establishment with suspicion. In particular, union members are asking why the company is moving now to strip GM Korea of its R&D activities are create a separate corporation, when most makers of finished automobiles have their production and R&D functions under a single corporation. The union views the R&D corporations’ creation as a preliminary step in reorganizing the company into a system optimized for restructuring.

If the R&D functions are taken away as GM intends, GM Korea would likely be left with only finished car and transmission production duties – essentially reducing it to a production base for the GM head office. In the past, rumors of a GM Korea retreat sparked prediction that the production facilities would be shut down, leaving only the R&D functions behind. The union’s fear is that the rumors will become a reality.

“The corporation GM is talking about establishing is not a case of creating an all new corporation, but splitting the existing corporation’s production plant and R&D functions between two corporations,” the union explained.

“Behind this corporation splitting move, there is a hidden aim by the GM suits to shut down or sell off a second factory,” it worried.

GM Korea explained that “the role of the current R&D section has remained the development of subcompact and compact models ever since the days of Daewoo.”

“With the new corporation, we will be upgrading its global vehicle development role and reorganizing things to allow it to work more closely with the GM head office,” it said.

A company official added, “The recovery plan presented as a long-term growth visit will be pursued unchanged.”

Meanwhile, the GM Korea union also noted that “around 960 employees at the team leader level and higher received bonuses of 13 to 15 million won [US$11,500–13,300] apiece at a time when the company has been putting off the interim payment of severance to workers, claiming it does not have the money.”

“This is a serious example of moral bankruptcy, where the company is paying out a banquet of bonuses after leveraging its workers’ sacrifice into an 810 billion won [US$718 million] cash infusion from Korea Development Bank,” the union said.

By Hong Dae-seon, staff reporter

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