GM presses Korean government on foreign investment zones, due diligence investigation

GM International President Barry Engle

The company threatened to file for bankruptcy unless it reaches a collective bargaining agreement with unions by Apr. 20

GM International President Barry Engle

During a meeting with government officials on Mar. 27, GM International President Barry Engle asked once again for the government’s cooperation and support with GM Korea’s application for the designation of foreign investment zones and also with the Korea Development Bank’s (KDB) due diligence investigation of GM Korea. During a meeting with leaders of the GM Korea labor union the previous day, Engle mentioned the possibility of the company going bankrupt because of its financial difficulties and pressured them to quickly reach a tentative agreement in their collective bargaining.

On his fifth visit to South Korea, Engle met with senior government officials from the Ministry of Trade, Industry and Energy and the Ministry of Strategy and Finance and KDB Chairman Lee Dong-geol. On Mar. 13, GM Korea submitted separate requests to the city of Incheon and South Gyeongsang Province to designate its plants in Bupyeong and Changwon as foreign investment zones. The KDB is currently carrying out a due diligence into company management.

During his meeting with the leaders of the GM Korea labor union on the afternoon of Mar. 26, Engle said that the company could go bankrupt next month if a tentative agreement is not quickly reached in collective bargaining. “We have been running on an austerity budget since Feb. 28. By the end of April, we will need US$600 million to pay as a settlement to voluntary retirees and to our suppliers, and in our current financial situation no more support will be possible,” union officials quoted Engle as saying.

“The government is telling us we have to come up with a definite recovery plan by Apr. 20, so we need the union to quickly reach a tentative agreement in collective bargaining. If you don’t do that by Apr. 20, we’ll apply for bankruptcy,” Engle reportedly said.

According to a source at GM Korea, the deadline of Apr. 20 mentioned by Engle is “the Friday of the next to the last week of the month after the due diligence is over. This was apparently the date mentioned by KDB Chairman Lee Dong-geol and Deputy Minister of Trade, Industry and Energy Lee In-ho during their previous meeting with Engle.” But the government denied that that was the case.

“Why would the government need to create that kind of deadline? The government has no reason to meddle in collective bargaining between labor and management, either,” said a senior official from the Ministry of Trade, Industry and Energy.

By Hong Dae-sun and Choi Ha-yan, staff reporters

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