Hurdles cleared for GM’s departure

The final hurdle for U.S. automaker General Motor’s possible departure from the Korean market has been lifted.

The Korea Development Bank (KDB), which is the second-largest shareholder of GM Korea with a 17.02 percent stake, said its right to veto the top shareholder’s decisions expired Monday. GM’s head office holds a 76.69 percent share of the Incheon-based automaker.

The 15-year-old veto right has been an instrument to discourage drastic measures by GM’s head office such as a withdrawal from Korea or disposal of its major assets.

Without the KDB’s veto right, however, GM has no legal restraints in pulling its operation out of the Korean market.

“The situation is not very good around GM Korea,” Daelim University Professor Kim Pil-soo said.

“GM Korea’s operating losses have surpassed 2 trillion won over the last four years. Former GM Korea President and CEO James Kim suddenly stepped down. And new CEO Kaher Kazem is the one who shut down GM’s India operation. The militant union is still demanding higher wages and more benefits. There is no reason for Detroit to sustain its operations in Korea.”

The American carmaker’s affili- ate here has suffered losses for the last four years. It netted losses of 353.4 billion won ($310.2 million) in 2014, 986.8 billion won in 2015 and 631.5 billion won last year.

Its 2016 balance sheet showed debt amounting to 1.29 trillion won.

It also suffered a 258.9 billion won loss in the first quarter of 2017.

In addition, GM Korea’s recalcitrant union, which carried out a partial walkout this year, is still demanding a basic salary raise of 154,883 won, a 500 percent incentive payment while reducing night shift work by one hour.

They also demanded the company pay their salaries even if production is temporarily halted.

“Incumbent CEO Kazem has emphasized that GM Korea will never leave the market. However, things will be different by the end of this year after the National Assembly audit and U.S. President Donald Trump’s visit to Korea,” Kim said.

“If GM decides to leave Korea, the impact will be enormous. There are more than 3,000 subcontractors and partner firms. Many of them will go out of business and this will threaten the nation’s economy.”