November 23, 2024

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[THE INVESTOR] As rumors rage on over GM’s possible exit from the Korean market, the carmaker’s labor union here said it would closely monitor the situation and the newly-appointed CEO, stressing it would not tolerate the carmaker’s withdrawal from the country. 

“We hope to carry on the wage talks with the new CEO,” said an official from GM Korea’s labor union, who wished to remain anonymous. “The union hasn’t met Kaher Kazem, so we are not sure what his policy and plans are toward the union and the local unit. But he should come up with an improved proposition and a business plan that can sustain the workers and the company at the negotiating table.”

“The union will not accept GM’s exit from the Korean market,” he added. 

The labor union, which in July voted to go on strike if ongoing talks with management break down, remained rather careful about voicing concern against Kazem’s appointment. 

“The union is aware that the wage negotiations are still underway and the difficult business situation GM Korea is facing at the moment,” an industry source said. 

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On the previous day, GM Korea announced it has appointed GM India President Kazem as the new CEO of the Korean unit from Sept. 1, replacing James Kim, who resigned in July. 

The appointment of Kazem, who arrives fresh from overseeing the winding down of GM’s India operation, has added fuel to already mounting speculation of a GM Korea exodus. GM recently announced it would stop selling cars in India by year-end, and about 400 employees have been laid off as a result. But the number is expected to increase to several thousand, according to media reports. 

Many industry watchers have raised concern that Kazem will do the same in Korea, following the pattern of GM’s global restructuring scheme. The firm recently completed a deal to sell its European operation Opel, including the Vauxhall brand in the UK, to France’s PSA Group, pulling out its brand from the region. It also announced its exit from South Africa, following its decision to drop Russia and Australia. 

GM Korea’s exponential losses that have piled up to nearly 2 trillion won (US$1.75 billion) in recent years, backed the claim. The exit started to look more likely when GM Korea’s second-largest shareholder the Korea Development Bank said it could not block GM if it decides to leave the country. In Oct., KDB, which owns a 17.02 percent stake of GM Korea, will lose a veto right to dissent GM if it decides to sell off its GM Korea shares and exit the country.

GM Korea, however, repeated it has no such plans to leave the Korean market, adding Kazem is appointed to lead the Korean unit to regain profits, optimize production and refute the exit rumor. 

“Any senior level leaders within GM comes with restructuring experiences due to GM’s world-wide reshuffling moves in recent years,” a spokesperson for GM Korea told The Investor. “Kazem is an auto expert who has held key leadership positions in manufacturing and business operations in many different markets. He is the right man with the experience and global perspective to lead Korean unit to become more competitive and sold various issues, including finalizing wage talks, regaining profits and extinguishing the exit rumors.”

She stressed the Indian market, where GM cars only had a 1 percent market share, was different from the situation in Korea, which GM calls a “production hub” and claims about 10 percent of the market. 

Kazem began his career with GM in 1995 in Australia and held several key leadership positions in GM Holden Manufacturing Operations. In 2009, he became vice president of manufacturing and quality for GM Thailand and ASEAN. He was appointed president of GM Uzbekistan in 2012. In 2015, he joined GM India as chief operating officer and has been leading the Indian unit as president since 2016.

By Ahn Sung-mi (sahn@heraldcorp.com)