hankyoreh

Workers head to their shifts at GM Korea’s Bupyeong factory in Gyeonggi Province while the company’s Employment Special Measures Committee meets for a third round of negotiations on Feb. 21.

Amid reports that the GM corporate headquarters in the US has announced the closure of GM Korea’s factory in Gunsan, North Jeolla Province and asked the South Korean government for more than 1 trillion won (US$920 million) in aid and tax benefits, the spotlight is turning to GM’s practice of using jobs and the local economy as leverage to force governments around the world, including Australia and Europe, to shoulder the cost for its corporate restructuring.

The Australian and European experience with GM is prompting concerns that, if the South Korean government prioritizes GM Korea’s short-term survival, its financial and tax support may be squandered on temporary life support for the jobs of workers in its factories. In other words, if the government pumps support into GM Korea without obtaining a mid- and long-term blueprint for GM’s development, the South Korean public might be left to cover the bill of the company’s phased withdrawal – which the GM corporate headquarters ought to pay, given its considerable responsibility for GM Korea’s poor management.

According to multiple politicians and government officials interviewed by the Hankyoreh on Feb. 21, GM’s request for government assistance, at least thus far, can be broken down into four main points: a guarantee for GM Korea’s outstanding loans, a greater infusion of capital by the Korea Development Bank, financial support and incentives. This was the gist of the request for government assistance unveiled by GM International President Barry Engle during meetings with officials from government ministries through the beginning of February, when he also mentioned a plan to normalize management at GM Korea.

The series of actions taken by GM in South Korea is reminiscent of the company’s requests for assistance from local governments in other parts of the world, including Australia and Europe. During the decade since the GM corporate headquarters was resuscitated with an infusion of public funding from the US government during the global financial crisis in 2009, the company has been relentlessly proceeding with a restructuring plan for its global operations.

Established in the 19th century and acquired by GM in the 1920s and 1930s, European and Australian automakers Opel and GM Holden went through a restructuring process during which GM shut down their factories and then eventually sold them off altogether in 2017. A similar story involves Saab Automobile, whose management rights went to GM in 1990. Despite government assistance, the company was passed around a number of buyers until it was finally liquidated in 2017.

Germany’s Opel, the UK’s Vauxhall Motors, Australia’s GM Holden and Sweden’s Saab Automobile all retained a strong identity as national companies with production facilities, even though GM took over their management long ago. For this reason, the fact that concern for jobs and the local economy forced these governments to devote considerable assistance to these companies, both through financial aid and tax relief, has major implications for South Korea.