Héctor Villarreal, CEO of GM Korea (left), meets with Vice Minister Kwon Chang-jun. (Photo courtesy of the Ministry of Employment and Labor)
SEOUL, Aug. 24 (Korea Bizwire) — As South Korea’s ruling party presses ahead with the passage of the so-called Yellow Envelope Law, one of the country’s most prominent foreign manufacturers, GM Korea, has urged the government to reconsider, warning that its Korean operations could face a reassessment by Detroit headquarters.
At a closed-door meeting convened by the Ministry of Employment and Labor on August 21 with top executives from the auto, shipbuilding and steel industries, GM Korea chief Héctor Villarreal expressed strong objections to the legislation, according to industry and labor officials.
Participants said Villarreal emphasized Korea’s already high labor risks, warning that GM headquarters might reevaluate the viability of its local plants if the law were enacted.
Although he stopped short of using the word “withdrawal,” attendees said his comments carried the clear implication that Korea could lose its status as one of GM’s key Asian production bases.
Other executives present, including leaders from Kia, POSCO, Hyundai Steel, HD Hyundai Heavy Industries and Hanwha Ocean, voiced concerns about the bill’s impact on management, but Villarreal was described as particularly forceful in calling for a rethink.
GM Korea (Image courtesy of Yonhap)
The Yellow Envelope Law — formally revisions to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act — would broaden the scope of legal strikes, extend parent company liability to subcontractor disputes and limit the ability of firms to seek massive damages from striking workers. Labor unions hail the measure as vital protection against “compensation bombs,” while business groups warn it could destabilize industry.
GM’s intervention comes at a sensitive moment. The automaker has already scaled back in Korea, shuttering its Gunsan plant in 2019 despite a 2018 government bailout deal worth 810 billion won ($750 million) that was meant to secure its presence for a decade.
More recently, U.S. tariffs on Korean exports, the sale of GM Korea service centers and partial strikes by unionized workers have fueled speculation of a pullout.
Globally, GM has withdrawn from multiple markets over the past decade, including Australia, Indonesia, Thailand, Europe and India. The company’s Korean unit, once a regional hub, now faces heightened scrutiny as its 2018 survival agreement nears expiry in less than two years.
A senior auto industry official said the renewed tension underscored Korea’s precarious position: “GM cited labor risks when it considered leaving in 2018. Government support kept them in, but now those old questions are coming back, and the future of the Korean operations looks increasingly uncertain.”
Kevin Lee (kevinlee@koreabizwire.com)
