Making Trax for Bankruptcy? GM Korea Fails to Meet Wage Deal Deadline, Future Cloudier Than Ever

As April 20th dawns without a wage deal with its workforce, General Motors’ troubled Korean division could be well down the road to bankruptcy.

GM Korea, which recently announced the closure of an assembly plant amid a continued loss of sales and money, needed to reach a deal with its 16,000 workers by today’s date in order to gain assistance from the South Korean government. The division builds the Chevrolet Spark, Trax, and Buick Encore for U.S. customers. Since revealing its r estructuring plan back in February, GM Korea failed to gain much-needed wage concessions from its aggressive labor union.

Without this, bankruptcy might be the only option, the automaker claims.

In an email to employees seen by Reuters, GM Korea chief executive Kaher Kazem wrote, “Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings.”

It’s a threat the division has used before, but it didn’t bring about the desired concessions. Instead, workers threatened to strike, then sacked the automaker’s executive offices. GM Korea needs to free up $600 million in operating funds in order to receive a government aid package, as the state-funded Korean Development Bank owns a 17 percent stake in the automaker.

Reuters reports that a decision to file for court-led rehabilitation was delayed until to Monday, and a union official claims both sides will continue talks until Monday afternoon. One of the sticking points involves job security for workers at the soon-to-be-shuttered Gunsan assembly plant.

“We don’t want a disaster,” a union official said as talks commenced. “We still have to keep in mind the worst situation.”

For GM Korea to go ahead with bankruptcy proceedings, it would first have to secure approval from 85 percent of its shareholders.

[Image: General Motors]