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Companies

GM bans business trips to South Korea amid labor discord

Workers at cash-strapped local unit angry over skipped bonus

GM Korea has been bleeding red ink. Its plan to skip bonus payments drew ire from union members.   © Reuters

SEOUL -- General Motors has in effect banned business trips to South Korea amid rising tensions with the labor union of its money-losing local subsidiary.

The move is likely a response to an incident earlier this month, when union members stormed into the office of GM Korea CEO Kaher Kazem, destroying some equipment. They were outraged by Kazem's plan to skip bonus payments scheduled for April 6 due to cash flow concerns stemming from earnings declines.

The U.S. automaker told its executives and employees worldwide -- except those in South Korea -- not to visit the offices and factories of GM Korea, sources close to the matter said.

The underlying intent of the travel ban is unclear. But GM could be trying to send a message to the South Korean government that it is concerned by the labor union's hard-line response, which it considers an obstacle to improving the local unit's performance.

GM Korea said in February that it would close a vehicle assembly plant and has requested lender support, including funding from the state-backed Korea Development Bank. The company has an April 20 deadline to compile a rehabilitation plan.

GM has sent Executive Vice President Barry Engle to South Korea to lead talks on the local unit's rehabilitation with the South Korean government and the Korea Development Bank.

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