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Unless Union Makes Concessions by April 20, GM Korea Could File for Bankruptcy

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General Motors says GM Korea will file for bankruptcy if its union doesn’t make concessions by April 20.

The U.S. automaker’s struggling South Korean operations are in danger of running out of cash by the end of the first quarter. General Motors has sought help from the government along with the union concessions in order to keep GM Korea open. To receive that assistance, GM Korea is under pressure to submit a rescue plan.

General Motors says that plan can’t be submitted without the union first agreeing to reduce labor costs, including a wage agreement by March’s end. A union official says GM Korea is asking for benefit cuts of $74 to $84 million. That’s on top of more than $450 million in concessions that have already been made by the union.

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GM Korea’s Boryeong plant

GM Korea employs about 16,000 people, but in February the automaker announced plans to shut down its plant in Gunsan. That closing, scheduled for May, will leave GM Korea with only three plants. Nearly 2,500 workers nationwide have applied for a buyout package.

According to Reuters, GM Korea’s turnaround plan may call for eliminating 5,000 more jobs while keeping production steady.

General Motors has eased the pressure on GM Korea by stepping in to lend it money and grant temporary debt relief. But much more assistance will be needed in the months to come.

GM Korea lost $1.8 billion dollars between 2014 and 2016, a consequence of reduced auto sales as well as General Motors’ pullouts from several export markets served by its South Korean operations.

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News Source: Reuters