Labor unions and civic groups urge Incheon City to prevent GM Korea’s corporate spinoff

Posted on : 2018-10-11 17:10 KST Modified on : 2019-10-19 20:29 KST
Rumors of automaker’s impending withdrawal incite backlash
The Incheon Regional Alliance
The Incheon Regional Alliance

GM Korea’s plans to spin off the R&D and production corporations at its headquarters in Incheon’s Bupyeong neighborhood are prompting the automaker’s labor union and local civic groups to urge the city to take stern measures against what they see as the initial steps toward the automaker’s withdrawal.

The Incheon Regional Alliance, an organization comprising the GM Korea labor union and 36 other groups, held a press conference in front of Incheon City Hall on Oct. 10 to demand that the city notify GM Korea of its “firm position on spinning off its corporations.”

“The intent is clear, namely to turn the Bupyeong plant into a production subcontracting base and leave only the new corporation once the spinoff is complete, before eventually closing the production plant in the long term,” the alliance said.

“After granting benefits to GM Korea for decades, the city of Incheon is new standing by and watching this shameless attempt,” it added.

 an organization including the GM Korea labor union and 36 other groups
an organization including the GM Korea labor union and 36 other groups

The alliance’s members called on the city to clearly state its planned measures in the event of a spinoff, including the withdrawal of Cheongna Institute land that GM Korea has been allowed to rent free of charge for up to 50 years. In 2005, the city responded to growing rumors of GM Korea’s impending withdrawal by signing a rental contract with GM Korea for the Cheongna Technology Institute site, which provided 475,000 square meters of land free of charge for 30 years (with the possibility of a 20-year extension).

“The agreement stipulates that the Cheongna land cannot be transferred or loaned to another corporation,” said Lee Bok-nam, deputy chairperson of the Korean Metal Workers’ Union GM Korea chapter.

“If a new R&D corporation is created, it will forfeit its status as a party to the agreement,” Lee explained.

GM Korea passed a motion for the corporate spinoff at a board meeting on Oct. 4 and plans to convene a general shareholders’ meeting on Oct. 19 to vote on the plan. The Korea Development Bank (KDP) previously filed an injunction request with Incheon District Court on Sept. 20 to bar the meeting from taking place on the grounds that GM Korea pursued the corporations’ establishment without consulting with KDB as second-largest shareholder and that a spinoff was not included in the basic agreement for GM Korea’s management normalization reached last May.

Incheon Regional Alliance called on the city of Incheon to “state a clear position to KDB so that it is reflected in the injunction application to prohibit the general shareholders’ meeting from being held.”

Yang Seung-jo, the alliance’s permanent co-representative, noted that the South Korean government “provided 850 billion won (US$745 million) in support in response to GM Korea’s bankruptcy threats last May, forcing only the workers to make a sacrifice.”

“They bear a large part of the blame for a long-term management situation not being clearly established,” Yang said of the government.

“The government and the city of Incheon need to show some responsibility instead of continuing to sit around and allow the corporation spinoff to happen,” he added.

An Incheon city official said, “We are looking at things the city can do, including a legal review on the validity of the Cheongna Technology Institute land rental contract in the event of a corporation spinoff.”

By Lee Jeong-a, staff reporter

Please direct comments or questions to [english@hani.co.kr]

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