GM Korea avoids bankruptcy vote after new wage agreement
- Bankruptcy vote by GM Korea board delayed
- Deal opens the door to more support from the Korea Development Bank and a fresh cash boost from the South Korean government
General Motors (GM) has reached a new wage agreement with labor unions in South Korea as the regional unit's board delayed its decision to file for bankruptcy protection.
The deal opens the door to the loss-making unit finding more support from the Korea Development Bank and a fresh cash boost from the South Korean government.
GM Korea said Monday that the agreement was an opportunity for GM to allocate new vehicles for production in South Korea to help its recovery.
The U.S. automaker owns almost three quarters of GM Korea while the Korea Development Bank owns a 17 percent stake in the company. Chinese automaker SAIC Motor controls the remaining 6 percent stake.
"Through the latest agreement, GM Korea will be a competitive manufacturing company," said Kaher Kazem, chief executive of GM Korea, in a statement Monday.
GM Korea posted a total of 1.9 trillion won ($1.8 billion) in net losses between 2014 and 2016, according to Reuters.
In recent years, GM ceased manufacturing in Australia and Indonesia, and significantly restructured its Thai operations. It is also winding down efforts to sell cars in India and is turning its manufacturing facilities there into an export hub.
The automaker's decisions to exit unprofitable markets have exacerbated problems for GM Korea.
GM said February that one of four South Korean plants would close and it would start voluntary redundancies for thousands of workers as part of restructuring plans.
GM sells Chevrolet and Cadillac brand vehicles in Korea, and more than half the vehicles built by GM's Korean plants are exported.
Despite stronger-than-expected U.S. sales for March, the automaker is cutting several hundred jobs at its Ohio plant.