General Motors’ South Korean unit plans to slash 5,000 jobs, or about 30 per cent of its workforce, but keep production steady if Seoul agrees to its $2.8 billion proposal for the loss-making operation, reports Reuters.
The US automaker announced last month that it would shut down a factory in Gunsan, southwest of Seoul, and that it was mulling the fate of its three other plants in South Korea.
The Detroit automaker, which owns 77 per cent of GM Korea, is negotiating with the South Korean government over the restructuring proposal, as state-run Korea Development Bank (KDB) owns a 17 per cent stake. GM’s main Chinese partner, SAIC Motor Corp Ltd, controls the remaining 6 per cent.
In the plan it submitted to the government and seen by Reuters, GM Korea proposed cutting the number of employees to 11,000 from about 16,000.
Because only 2,000 people work at the Gunsan facility, it appears the other factories will also be affected. The document did not specify when the cuts would occur.
GM’s proposal may put the Seoul government in a bind, as President Moon Jae-in seeks to save thousands of jobs but could face a public backlash if he uses taxpayer money as a lifeline for GM.
The document also showed GM plans to over 10 years create 1,100 new jobs, plus build two new sports utility vehicle (SUV) models and a compact car engine in South Korea.
The government has said it would decide on whether to provide support after conducting due diligence on what it has called GM’s“opaque” management of its operations in the country.
GM Korea declined to comment on details of the proposal.
“We will reduce our cost base to make our business profitable,” a GM spokesman said, adding it has been undertaking a series of restructuring actions.
The US automaker is seeking concessions on wages from an angry labour union and launched a voluntary redundancy programme which closes on Friday.
A spokeswoman for trade ministry declined to comment.