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GM Korea
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Automaker’s labor union threatens to strike against what it sees as a withdrawal effort
An injunction application filed by the Korea Development Bank (KDB), GM Korea’s second-largest shareholder, to prevent the holding of a general shareholders’ meeting to vote on GM Korea’s plan to establish a separate R&D entity was dismissed by a court on Oct. 17. Following the decision, the GM Korea shareholders’ meeting is expected to go ahead as scheduled on Oct. 19. But the controversy over the company’s partitioning appears to mean more stormy weather appears in store for GM Korea after it narrowly succeeded in establishing a management normalization plan. In particular, the automaker’s labor union is threatening to strike over the R&D corporation establishment plan, which it sees as part of a move to withdraw GM’s activities in South Korea. In its Oct. 17 decision, the 21st civil division of Incheon District Court under Judge Yu Yeong-hyeon said, “As a credit in this case, KDB is within its rights to file a lawsuit on the merits of the general shareholders’ meeting decision and contest its validity, but as the debtor GM Korea would essentially lose an opportunity for noncompliance if this injunction application is granted.” “It cannot be concluded that there is imminent danger of unrecoverable damage to KDB as a credit if the holding of the general shareholders’ meeting is not prohibited. The need for this injunction application has not been sufficiently demonstrated,” the court explained on its reasons for dismissing the application. In an Oct. 4 board of directors’ meeting, GM Korea approved a motion to establish the design center, technology institute, and powertrain department at its Bupyeong headquarters as a separate R&D corporation. It explained its decision as being intended “for the smooth implementation of activities with the GM head office’s R&D section for the launch and development of new models.” KDB responded by filing the injunction application in court, contending that the entity’s establishment had been pursued without consulting with the bank as the second-largest shareholder and that the separate corporation’s establishment was not included in the basic agreement on GM Korea’s management normalization that was previously reached in May. In response to the court’s decision, KDB announced plans to “voice objections to the separate corporation’s establishment at the shareholders’ meeting.” “After seeing the results of that meeting, we will examine a lawsuit on the merits or other additional legal action,” it said. KDB’s other options to check GM’s activities Possessing a 17.0 percent share of GM Korea, KDB has other options to check the company’s activities through its outside director nomination and veto authority. Even if the bank does attempt to exercise its veto at the meeting, GM Korea is expected to approve the original plan without acknowledging veto authority. If that happens, KDB is expected to file a lawsuit on the merits and request a final court judgment on procedural flaws in the shareholders’ meeting. In an Oct. 10 parliamentary audit, KDB chairman Lee Dong-gull said, “I suspect there will be additional litigation on the merits on both sides, regardless of whether the injunction application is accepted or rejected.” “If it is rejected, KDB plans to attend the general shareholders’ meeting and exercise its veto,” he said. The GM Korea labor union has been vocal in its objections to the separate R&D entity establishment decision. The union suspects GM Korea of planning to reduce its Bupyeong plant to a production subcontracting base following the split, leaving only the new entity in place and closing or selling off the production plant in the long-term to make it easier to withdraw. Over a two-day period on Oct. 15–16, the union held a vote among its members to establish authority to take action against the company’s move to establish a separate entity; 78.2 percent of the union’s 8,899 members approved the decision. With more than 50 percent of all members with voting powers in favor, the union will have legal authority to strike or take other action if the National Labor Relations Commission (NLRC) decides to suspend arbitration. The union is expected to make its move after first seeing what the NLRC decides on Oct. 22. If it does launch a strike, GM Korea will face its first head-on clash with labor in the five months since its management normalization plan was established. By Hong Dae-seon, Jung Se-ra and Lee Jeong-a, staff reporters Please direct comments or questions to [english@hani.co.kr]
