GM Korea wage deal gets thumbs up

GM KOREA took another step towards survival today when union members voted to accept a tentative wage deal bashed out last weekend after the company board postponed a plan to place the car manufacturer in bankruptcy.

Almost 70 per cent of the 10,223 workers who cast ballots voted to accept the deal, thus heading off closure of GM Korea’s remaining three plants.

GM president Dan Ammann was later quoted by Reuters as saying that the rescue package involving the union, South Korean government and the Korean Development Bank was close to resolution.

“Over the last few months, over the last few weeks a lot of very good progress has been made,” he said in South Korea where he has been meeting with government members. “We appreciate constructive efforts from all parties, and we stand here today very close to a resolution.”

The union deal reportedly involves a freeze on base salaries and no bonuses for a year. GM apparently has agreed to move some of the remaining 680 workers from its Gunsan plant – which is set to close next month – to other factories, while at the same time allocating production of two future models – reportedly SUVs – to them.

The final hurdle now will be agreement on a government aid package, along with refinancing by the bank. These were contingent on a union agreement with GM, which now has been wrapped up.

The Korean Development Bank is a 17 per cent shareholder in GM Korea. GM holds 77 per cent and GM’s Chinese partner, SAIC Motor, holds the remaining 6.0 per cent.

The deal to avert bankruptcy might not save Holden’s Astra sedan, though, as it is produced at the doomed Gunsan factory.

However, the Trax, Barina and Captiva that are made at the other GM Korea plants have, for the time being, avoided the axe.

Holden is set to discontinue at the Captiva later this year when the American-built Acadia large SUV arrives in the fourth quarter.

It has already given the chop to another of its Korean contingent, the Spark hatchback, due to slow sales in the micro-car segment.