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| Protesters rally against GM Korea's decision to close its Gunsan factory in front of the U.S. Embassy in downtown Seoul, Tuesday. / Yonhap |
GM Korea is by and large a basket case with losses in the billions and growing.
The Gunsan factory, the smallest of its three operations, should have been shuttered earlier, operating at 20 percent capacity.
There is a cyclical reason for its miserable state but the more fundamental one is GM's Korean operation has failed to get its act together and there is little chance that it will anytime soon.
GM is passing the blame to everyone but itself _ the union, the Korean government and the Korea Development Bank, its second largest stakeholder. And vice-versa.
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| GM CEO Mary Barra/ Courtesy of GM |
CEO Mary Barra said two weeks ago that she wouldn't allow its Koreans operations to remain loss-making outfits. Then, her messenger, Barry Engle, GM executive vice president, told the Korean government to accept its terms _ more subsidies and the freedom to restructure its workforce by the end of this month or else.
Engle visited Korea again to engage himself with the Korean side.
GM thinks that it has an unbeatable hand over Korea with local elections around the corner. After all, tens of thousands of jobs are at stake. If GM, a top American company, pulls out it could erode Korea's credibility in the middle of the North Korea crisis.
But GM's plight is very much of its own making.
It mispriced its products, missed the timing of new model introduction and resorted to wrong marketing.
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| GM Executive Vice President Barry Engle, CEO Mary Barra's emissary, poses with party leaders during his visit to the National Assembly Tuesday. /Yonhap |
This means remote control from Detroit, likely producing a political solution that fails to reflect reality.
Any concessions to GM's demand would be a reward for bad management, besides the impression of succumbing to the multinational firm's strong-arm tactics reminiscent of an imperial power handling of its colony.
More importantly, a political settlement would only provide a temporary solution to the ailing automaker without resolving the root cause of the problem.
That means that GM would come again and ask for more subsidies. It is comparable to the old Korean folk tale in which a hungry tiger keeps asking for goodies from a passerby and then eats her when she runs out of them.
There is an alternative.
If GM Korea is a mismatch between Korea and the American automaker's subsidiary, such a reunion should be terminated at the earliest date rather than going through what is certain to be a messy divorce.
Ssangyong Motor is a good example.
The automaker was taken over by China's SAIC which didn't have enough experience and commitment. Ssangyong suffered under Chinese leadership and turned into a basket case when it packed up and left.
The automaker was struck by a long labor struggle and was pushed to the brink of liquidation. But Mahindra and Mahindra, the Indian automaker, took it over and applied its unique management style of respecting local customs, not hurrying to profiteer and focusing on growth.
True, finding one like the Indian automaker is a difficult proposition, considering the rarefied ranks of global automakers.
For GM Korea, what's least needed is GM. What it needs to be viable again is a new partner and owner.
So the Korean government and GM should drop their pretensions that if this a phase where the crisis passes everything could be better, and prepare for their separation. The sooner, the better. It could be better.
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