General Motors plans to cut 5,000 South Korean jobs

A GM Korea dealer in Seoul said the planned shutdown has hurt the image of the company, and customers are concerned about services and residual values. (Reuters)
Updated 02 March 2018

General Motors plans to cut 5,000 South Korean jobs

SEOUL: General Motors’ South Korean unit plans to slash 5,000 jobs, or about 30 percent of its workforce, but keep production steady if Seoul agrees to its $2.8 billion proposal for the loss-making operation, according to a document seen by Reuters.
The US automaker announced last month that it would shut down a factory in Gunsan, southwest of Seoul, and that it was mulling the fate of its three other plants in South Korea.
The Detroit automaker, which owns 77 percent of GM Korea, is negotiating with the South Korean government over the restructuring proposal, as state-run Korea Development Bank (KDB) owns a 17 percent stake. GM’s main Chinese partner, SAIC Motor Corp., controls the remaining 6 percent.
In the plan it submitted to the government and seen by Reuters, GM Korea proposed cutting the number of employees to 11,000 from about 16,000.
Because only 2,000 people work at the Gunsan facility, it appears the other factories will also be affected. The document did not specify when the cuts would occur.
GM’s proposal may put the Seoul government in a bind, as President Moon Jae-in seeks to save thousands of jobs but could face a public backlash if he uses taxpayer money as a lifeline for GM.
The document also showed GM plans to over 10 years create 1,100 new jobs, plus build two new sports utility vehicle (SUV) models and a compact car engine in South Korea.
The government has said it would decide on whether to provide support after conducting due diligence on what it has called GM’s “opaque” management of its operations in the country.
GM Korea declined to comment on details of the proposal.
“We will reduce our cost base to make our business profitable,” a GM spokesman said, adding it has been undertaking a series of restructuring actions.
The US automaker is seeking concessions on wages from an angry labor union and launched a voluntary redundancy program, which closes on Friday.
A spokeswoman for trade ministry declined to comment.
Under the plan, GM would add its next-generation Trax small SUV and a brand-new compact SUV to its Korean production lines in 2020 and 2022 respectively, the document said.
The models are mainly aimed at the US market, it said.
It plans to manufacture 200,000 vehicles of each, and keep its overall production in Korea near 500,000 per year over the next 10 years. GM produced about 508,000 cars last year, far below the combined capacity of 910,000 cars per year at its Korean factories.
South Korea was for years a low-cost export hub for GM, producing about a fifth of the company’s global output of Chevy models at its peak. But the automaker’s decision to exit other unprofitable markets has exacerbated problems for GM Korea, which built many of the Chevrolet models GM once offered in Europe.
GM Korea reported on Friday that its domestic car sales slumped 48 percent in February.

Creditors take action against Al Jaber in decade-long saga

Updated 23 September 2020

Creditors take action against Al Jaber in decade-long saga

  • The downturn in the Gulf construction sector has triggered a number of corporate restructurings as companies are forced to reschedule debt, raise fresh borrowing or enter insolvency protection

DUBAI: Creditors have started to enforce claims against Abu Dhabi-based Al Jaber Group, in a dispute triggered by a construction downturn in the UAE more than a decade ago.

Al Jaber, a contractor with interests across a range of sectors, has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Abu Dhabi Commercial Bank, which is working as restructuring and security agent, said in a document dated Sept. 21 which was seen by Reuters, that it had instructions from the majority of creditors to proceed with claims against Al Jaber.

A representative for Al Jaber did not immediately respond to a request or comment. ADCB declined to comment.

The move follows delays in restructuring agreements, under which Al Jaber was to appoint a new board and sell companies and assets such as the Shangri-La hotels in Dubai and Abu Dhabi.

In exchange, creditors had agreed to extend the maturity of a 5.9 billion dirhams ($1.61 billion) loan, cut interest rates, and provide additional revolving debt.

The initial enforcement action now being pursued by creditors includes the “acceleration and demand for payment of amounts outstanding” under the previously agreed debt restructuring, a source familiar with the matter said.

Enforcement will also allow creditors to claim against Al Jaber’s chairman under a 4.5 billion dirham loan to the company.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

The coronavirus crisis has added to the strain and Arabtec Holding, the UAE’s biggest listed contractor, this week will discuss options including dissolution after the pandemic hit projects and led to additional costs.

Meanwhile, Dubai-listed construction firm Drake & Scull is working to reach an agreement with its creditors in an out-of-court process.