Sunday, March 19, 2006

GM Daewoo's Successes Mean Jobs

South Korea has five makers. GM Daewoo rose out of the ashes of a bankrupt Daewoo Group. This article discusses recent success at GM Daewoo.

Chosun Ilbo
Union and management representatives of GM Daewoo Auto & Technology on Friday announced an agreement to rehire by the end of May all 1,725 workers laid off in restructuring in 2001, when GM acquired Daewoo Motors. GM Daewoo is the first company in the country that has ever hired back every last worker it rationalized out.
As a condition for taking over Daewoo Motors five years ago, GM demanded restructuring including substantial cuts to the workforce at the Bupyeong plant, which was the least productive among the moribund company’s factories. Laid-off workers took to the street at the time, and their families clashed with police in the course of violent protests that saw hundreds injured and arrested. That is why the accord to hire them back has a special significance for union and management of GM Daewoo.

It is worth pondering the way the decision came about. CEO Nick Reilly has played no small a role. While heading the GM subsidiary in Britain, Reilly resolved a four-month labor dispute through constant dialogue. Assuming the helm at GM Daewoo, he has said, "However long it may take, all problems will be resolved through dialogue." It is that attitude that has moved the union to open its heart and come to an agreement.

But there is a more fundamental reason: the company's miraculous return from the brink. In the past five years, GM Daewoo has been reborn as an entirely different firm. Its sales last year increased 30 percent from the previous year and its exports 50 percent. As a result, GM Daewoo netted profits of W64.7 billion (US$64.7 million), a record even counting the years when it was plain Daewoo Motors. That success is due to vibrant exports taking advantage of GM's worldwide marketing networks, and particularly to hugely improved exports to China.

Now GM Daewoo is able to rehire all the 1,700-plus workers it laid off. The firm plans to move from the current single shift at the Bupyeong Plant into two shifts in June, when all five GM Daewoo plants will go into full operation.

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