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GM Korea urged to cut labor costs.

The lobby group representing the interests of automakers here is calling on GM Korea to reduce its labor costs if it wants to stay afloat.

The Korea Automobile Manufacturers Association (KAMA) said Monday the debt-ridden carmaker's labor costs-to-sales ratio is too high, compared to its domestic rival carmaker, Renault Samsung.

According to the KAMA study, GM Korea workers are on average 8.6 years older than Renault Samsung workers. Their average length of service is also 6.8 years longer than Renault Samsung workers.

GM Korea also pays an average wage of 86.7 million won ($80,929) per worker, 21.2 million won higher than Renault Samsung's 65.5 million won. The ailing carmaker's labor costs-to-sales ratio is also 11.4 percent, more than double Renault Samsung's 4.4 percent.

In the study, the KAMA highlighted Renault Samsung's efforts in burden sharing when the carmaker experienced a decline in production, domestic sales and exports in 2011.

During the 2012 management and labor negotiations, Renault Samsung workers accepted the company's demands to freeze their wages while working overtime. Also, management and workers frequently had lunch meetings to discuss improving the carmaker's production capacity.

As part of improving the carmaker's productivity, Renault Samsung decided to slash the salary step to introduce annual pay while implementing peak wages.

The single salary step is one of GM Korea's chronic reasons for their high production costs, the study said.

"GM Korea's poor sales are attributed to the Detroit headquarters' decision to withdraw its Chevrolet operations from Europe and Russia. But it wasn't the major reason," the KAMA said.

"The major reason was GM Korea's high production costs, falling short of the global automobile industry's standards. GM Korea's current production structure is just unsustainable."

The KAMA claimed in the study that GM Korea workers' demands have often jeopardized the company's management rights.

"Management has a right in human resources. But GM Korea's union workers have frequently interfered excessively in the company's decision-making process in hirings and layoffs," it said.

Top financial think tank Woori Financial Research Institute also said the ailing carmaker needs to downsize its production facilities to improve its operations.

It said GM Korea needs to reduce annual fixed costs by 900 billion won ($844 million) to salvage itself. Apart from its plan to convert its debt into equity, it also needs an immediate financial injection worth 1 trillion won, it added.

Denouncing GM Korea's head office in Detroit as "irresponsible," however, union workers claim GM is attempting to pass the buck to Korean workers for its poor management.

"The profit-obsessed foreign capital has only blamed workers for its deficits and the shutdown of the Gunsan factory in Korea," they said.

"GM should withdraw its plans for restructuring, which include the shutdown of the Gunsan factory, and immediately allocate a new vehicle model to the Korea operation."

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Publication:The Korea Times News (Seoul, Korea)
Geographic Code:9SOUT
Date:Mar 19, 2018
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