SEOUL, Dec. 27 (UPI) -- GM Korea, the South Korean unit of General Motors, is expected to normalize its management with the state-run Korea Development Bank after the bank's investment of an additional $350 million.
But some issues have yet to be resolved, including whether its newly established entity, GM Technical Center Korea, will ensure workers' rights, remain in Korea after the promised 10 years and whether GM's Asia-Pacific headquarters will be established in Korea.
KDB, GM Korea's second-largest shareholder, implemented its promised additional investment of $358.9 million on Wednesday, bringing its total investment in GM Korea to $720.9 million.
In return for its latest investment, KDB has received 11.9 million shares of GM Korea preferred stock. With the preferred shares not entailing voting rights, common stock ownership between GM and KDB remains unchanged in an 8:2 ratio.
KDB also dropped its court injunction action filed to negate the resolution at a GM Korea shareholders meeting allowing the separation of the R&D technical center in a spinoff from GM Korea. Cleared from legal barriers with KDB's withdrawal of the court injunction motion, GM Korea plans to spin off its R&D facility for the establishment of GM Technical Center Korea and register it on Wednesday.
GM Korea will thus change to focus on research and development and planning from GM global's production-oriented unit. GM Korea's transition will track with the launch of GM Asia-Pacific headquarters in Korea planned in the first half of next year.
Starting next year, GM Korea will also establish its own production plants and begin the expansion of its Bupyong plant to produce 75,000 vehicles annually for domestic sale and export.
With about 3,000 R&D personnel among GM Korea's 13,000 employees, the new corporation will focus on research and development for compact sport utility and new cross-over vehicles assigned by GM headquarters with production of those vehicles led by GM Korea.
"GM Korea will pursue change starting next year," said a GM Korea official, adding that it will move to hire 100 new engineers and expand its R&D personnel to more than 3,000.
But KDB's completion of the planned investment does not mean GM Korea's R&D spinoff plan has been accepted. KDB reportedly has commissioned an expert organization to examine the business plan documents submitted by GM Korea.
The result of that examination is expected before the end of the year. If the R&D spinoff plan is judged inadequate, KDB reportedly will reject it.
GM Korea's conflict with its labor union has not been resolved. The unionized workers at GM Korea have strongly opposed the separation of the new technical center, claiming that it will lead to the shutdown of production plants.
The labor union is planning to organize a protest plan at a delegate convention early in the new year.
Attracting GM's Asia Pacific headquarters to Korea is equally crucial. GM Asia Pacific headquarters is a unit under GM's U.S. headquarters in charge of production, sale and technology development for the Asia Pacific region. Its reach has been expanded to include the South American region at the end of last year.
But its workforce has been cut by about 70 percent in accordance of GM's campaign for the $100 million cost reduction. About 50 workers are on its payroll. For this reason, critics say, further investment will be limited if GM Asia Pacific headquarters is brought to Korea.
Still, the launch of the GM Asia Pacific headquarters is seen as the full-fledged start of the new GM Korea as GM Asia Pacific headquarters will be established, complete with four corporate units: GM Korea with production capacity, Cadillac Korea (former GM Korea) in charge of sales, GM Technology Center Korea with the research and development facility, and GM Asia Pacific headquarters with planning capability.
It has not been determined whether the transformed GM Korea is going to stay in Korea after 10 years. Considering GM's recent moves in and outside Korea, however, the possibility of withdrawing from Korea is high.
GM has announced a plan to shut down five production facilities in the United States by the end of 2019; about 6,700 jobs are at stake in those facilities in four states.
Along with the shutdown plan, GM announced that it will change 31 models, which account for 67 percent of its total 45 vehicle line-ups between 2019 and 2020. When a production model is changed, the production line must be adjusted.
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