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(EDITORIAL from The Korea Times on Sept. 8)

All Headlines 07:06 September 08, 2016

If GM pulls out

Union must heed CEO's plea

GM Korea's recent stellar performance is at risk of becoming a flash in the pan amid a labor dispute.

The union has been on a partial strike since Aug. 11, contributing to an 11.1 percent month-to-month fall in domestic sales last month. Both management and labor may emerge as losers, saddling the nation with an extra burden when it can least afford it.

Sale of GM Korea's latest hot model, the new Malibu sedan, took the hardest fall, tumbling 39.9 percent to 2,777, while its back orders amounted to 6,000 to 8,000 units.

This challenge comes at a time when GM is showing signs of a turnaround thanks to a boom in sales for the past couple of months thanks to its new models and competitive pricing, after suffering 1 trillion won in losses. However, it seems the subsidiary of the American car giant may go back to its usual role as the "sick man" in the nation's car industry.

James Woo Kim, CEO of GM Korea, has pleaded for unionized workers to stop the strike and help put the carmaker on the path to sustainable growth. "GM Korea faces many challenges, the biggest being talks with the union on wages and revisions to the collective pact," the Korean-American leader said by email. "The company will compensate its workers in proportion to their contributions."

Kim's pleas have so far fallen on deaf ears. The union has conducted partial strikes on more than 10 occasions, causing production delays to the tune of 10,000 units. Talks began in April and have gone through 20 rounds without a breakthrough.

Now, the ball is in the union's court and the union faces a familiar choice ― squeezing management for more compensation or delaying their demands until the pie gets bigger.

By many indications, the second looks to be the most reasonable option as the carmaker has just emerged from one of its worst years.

As formulated in the country's major labor-management dispute, a dramatic resolution may come by an eleventh-hour agreement. But the situation needs to be understood in broad context.

GM CEO Mary Barra canceled her Aug. 30 visit to Korea, two days after invitations were sent. It was speculated that the cancellation was caused by the ongoing strike. Then, a union delegation bypassed management here and visited Singapore for talks with GM representatives.

Also factoring in are reports occasionally from GM headquarters in Detroit that the American carmaker is considering pulling out of Korea, although they have been denied.

Worthy of note is that GM has been more efficiency- and profit-oriented after a government bailout in the 2008 financial crisis. At that time, the boneheaded management and "overly generous" compensation package to union members were to blame for its bankruptcy.

Simply put, GM is no longer a charity as it was a decade ago but a multinational firm that is ready to leave if it doesn't make money. Its recent record also backs it up. Then, the union should realize that it has as much at stake as its CEO does in making the company work better.

So far, it looks engaged in its usual tactic of taming the new CEO and preoccupied with its brinkmanship for a quick sweet deal. It's time to think of the worst-case scenario.
(END)

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