GM Korea faces union opposition on revamped Cruze plans

Published November 15, 2012

| Reuters

Labor leaders at the South Korean unit of General Motors are ratcheting up pressure on GM to reverse course and build its next-generation Chevrolet Cruze model in the country, over fears GM's plans to build it elsewhere will cost Korean jobs.

Union officials said GM Korea head Sergio Rocha told them on November 1 that the new Cruze will be produced in Europe and four other regions, sparking speculation that GM may move the output to Europe to help boost efficiency at its money-losing unit there. Rocha has said the automaker has not yet decided which overseas factories will produce the new Cruze small car.

Union leaders also said they met with Rocha on Thursday and he reiterated that GM cannot retract the production decision.

"Should (GM) not withdraw the decision, it will face enormous resistance (from workers)," union leader Min Ki said in a statement, adding the union would do all it could to block the move.

The current Cruze model accounts for 50-60 percent of about 260,000 vehicles produced at GM Korea's plant in the southwestern city of Gunsan, which employs about 3,300 workers. GM has two other car plants in South Korea. The fully revamped Cruze model is expected to hit the market in fall 2014.

"The next-generation Cruze is the lifeline of Gunsan factory. The plant is flooded with anger about GM which is trying to cut its lifeline," Min said previously.

The union has also called for meetings with GM's Tim Lee, the head of international operations and CEO Dan Akerson.

Rocha downplayed concerns about any plant shutdown or output cuts at the factory, according to the union.

"We will seek ways to maintain utilization rates at Gunsan plant by continuing to produce the current Cruze model," said Park Hae-ho, a spokesman for GM Korea.

A union spokesman, Choi Jong-hak, who previously threatened "a war" should GM Korea move output out of the country, said the union is seeking to garner support from politicians and Korea Development Bank (KDB), GM Korea's second-biggest shareholder.

GM has said previously that it wants to increase its stake in its South Korean operations. While it owns close to 77 percent of GM Korea, KDB's 17 percent holding gives the state-run bank the right to veto some decisions made by the automaker.

(Reporting by Hyunjoo Jin)

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