LDN - Business

South Korea union says GM plant closure is 'death sentence', threatens strike

[February 14, 2018] By Heekyong Yang and Ju-min Park

GUNSAN/SEOUL (Reuters) - General Motors' <GM.N> workers at a South Korean plant staged a protest on Wednesday against its planned closure, calling the move by the U.S. automaker a "death sentence", and threatening a strike.

In the city of Gunsan, where the factory with 2,000 workers is, shuttered store fronts and empty streets near the plant are a stark reminder of the depressing impact on the rural town.

The factory had already been running at about 20 percent of capacity over the past three years even before the U.S. carmaker announced the closure.

"Gunsan city worked really hard to rescue GM, buying GM cars produced from the factory. The whole town is now in panic," Park Chung-hi, chairwoman of the Gunsan city council, told Reuters.

Park who also has a GM car said one out of five in Gunsan, including family members of workers at GM's part suppliers, relies on the U.S. carmaker's operation there.

GM's South Korean unit launched a voluntary redundancy scheme for its 16,000 workers in the Asian nation after announcing on Tuesday it will shutter the plant in Gunsan by May and decide within weeks on the fate of the remaining three plants in the country.

Unionised workers at the Gunsan plant wore red headbands saying "Solidarity, Fight" and held leaflets demanding the withdrawal of the closure plan. Some had shaved their heads.

"Let's protect our right to live on our own," Kim Jae-hong, the leader of the workers' union at the Gunsan branch, said amid tears.

GM's planned revamp of its loss-making South Korea operations is the latest in a series of steps by the automaker to put profitability and innovation ahead of sales and volume. Since 2015 GM has exited unprofitable markets including Europe, Australia, South Africa and Russia.

It is offering South Korean workers three times their annual base salary, money for college tuition and more than $9,000 toward a new car as part of a redundancy package.

A spokesman of GM Korea, the local unit, said the company would continue discussions with the union and seek their understanding over the closure plan.

But workers were far from placated. The union will establish a detailed plan in protest against the shutdown that may include a strike and holding of a sit-in rally at the headquarters of GM Korea, according to the union's Gunsan branch.

"We can't accept this. The company informed us about the closure plan, not asking for our opinion. It was already the end of the discussions," Dang Sung-geun, a senior official at the union of GM Korea, told Reuters by telephone.

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Members of the GM Korea union, a subcommittee for Korea Metal Workers' Union, hold a meeting to demand GM Korea withdraw its plan to shut down Gunsan manufacturing plant in Gunsan, South Korea February 14, 2018. Yonhap via REUTERS

"This is like a death sentence notice before the Lunar New Year holidays."

Dang said about 1,200 unionized workers from GM Korea joined the protest at the Gunsan factory, a day before the Asian country begins Lunar New Year holidays. Gunsan is located in the southwest of the country.

U.S. President Donald Trump on Tuesday used GM's decision to close the plant to launch fresh criticism of the U.S.-South Korea trade agreement.

Trump recently approved tariffs on South Korean washing machines, while South Korea has vowed to take countermeasures through the World Trade Organization (WTO).

South Korea's trade ministry said it will take a dispute against the United States to the WTO, involving the imposition of high anti-dumping duties on South Korean steel and transformers.

WAGES, PRODUCTIVITY IN FOCUS

GM executives have complained about South Korea's relatively high wages and its strike-prone labor union. But Dang of GM Korea's union blamed the company for reducing output, saying lower wages were not acceptable.

The automaker's restructuring plan places South Korean President Moon Jae-in in an uncomfortable spot, as he has pledged more new jobs and job security.

South Korea's strong labor unions have weighed on the country's automobile industry, which Moon's administration views as a challenge, a trade ministry official said.

"The South Korean auto industry's high cost and low productivity has been a deep-rooted issue, which can't be fixed overnight, but we will try to resolve this issue by building trust with the unions and the companies," said the official who asked not to identified.

Locals in Gunsan, the small city with population of about 270,000, say the closure will hit the economy hard, putting many out of business.

"The economy of the neighborhood is all dying," said Kim Heung-sik, a taxi driver whose cousin worked for GM Korea's subcontractor.

(Reporting by Heekyong Yang, Ju-min Park; Editing by Lincoln Feast, Muralikumar Anantharaman and David Evans)

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