Is General Motors (NYSE:GM) headed for labor trouble – in Korea?
South Korea is one of GM's most important global outposts. It makes almost 1.5 million vehicles a year in the country, many of which are exported to other markets around the world.
But the union that represents GM workers in South Korea is a combative one, and recent remarks by GM's CEO have riled up the union's leadership.
Now it sounds like GM is trying to walk those remarks back – but it might be too late.
A well-intentioned remark that provoked labor leaders' ire
The latest development in GM's long-running tug-of-war with its Korean union erupted earlier this week, when Korean union leaders who had been invited to Detroit to meet with GM quoted CEO Dan Akerson as saying that while he wouldn't move GM's operations out of Korea, he would be discussing GM's labor concerns with South Korea's president. That didn't play well with the union.
Akerson's comment about moving GM's operations was surely an attempt to walk back some remarks he made in April. Akerson got himself into hot water with Korean labor union leaders last month when he said that GM would consider moving its operations out of South Korea if tensions with North Korea continued to rise.
That was an offhand remark in answer to an interviewer's question, one that followed expressions of serious concern for GM employees who work in its factories in Korea. Those factories aren't far from the demilitarized zone that separates South Korea from its communist northern sibling.
Taken together, it was exactly the kind of thing you'd expect any concerned global CEO to say. But it didn't play well with the union that represents workers at GM's five factories in South Korea.
Is this union spoiling for a fight with GM?
Union leaders took Akerson's remarks as "a threat", one intended to make them "jittery" before upcoming contract negotiations. Those negotiations are likely to be combative: Labor costs in Korea have risen sharply in recent years, in large part because of union pressure – but GM is on a global push to control costs and increase profitability.
GM has said repeatedly that it wants a more "collaborative" relationship with its Korean union, more like the relationship that it and rival Ford (NYSE:F) have developed with the United Auto Workers here in the U.S.
GM doesn't comment on its discussions with union leaders, but it's likely that its desire for a better relationship with the Korean union was behind its decision to invite union leaders to Detroit ahead of a state visit by South Korean President Park Geun Hye to Washington on Tuesday.
That seems like a worthwhile gesture to have made. But it's looking like GM is in for a fight in Korea, whether it wants one or not.
Motley Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.