Court Puts Brakes on GM's R&D Subsidiary Plans

  • By Ryu Jung

    November 29, 2018 11:48

    A court has put the brakes on GM Korea's attempt to set up a research and development unit that critics fear is a preliminary to closing down production facilities here.

    The Seoul High Court on Wednesday ruled in favor of state-run Korea Development Bank, the company's second biggest shareholder, which filed for an injunction to halt the attempt last month.

    GM Korea management appeared stunned by the ruling. But industry watchers say the court ruling could give the U.S. automaker even more reason to pull out of Korea as it faces strikes and pressure to give full-time contracts to temporary workers.

    GM Korea had planned to move some 3,000 out of its 10,000 employees to the separate unit, which was to be called GM Technical Center Korea and would fall under the direct control of headquarters in Detroit.

    The ruling suggests that KDB, as a major shareholder, is in a position to veto the decision.

    Industry watchers say GM, which has closed a slew of factories around the world, is only keeping the Korean subsidiary running due to its R&D capability and network of parts suppliers, but could pull out if it faces obstacles to developing new cars here.

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