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GM Korea urges Seoul to reconsider before passage of pro-labor bill

Published: 24 Aug. 2025, 16:31

LEE JAE-LIM
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GM Korea CEO Hector Villarreal, left, shakes hands with Labor Vice Minister Kwon Chang-jun during a meeting between officials from the ministry and CEOs from the automobile, shipbuilding and steel industries at the government complex in Seoul on Aug. 21 in this photo provided by the Ministry of Employment and Labor. [MINISTRY OF EMPLOYMENT AND LABOR]

Hector Villarreal, chief executive officer (CEO) of GM Korea, has asked the government to reconsider a controversial pro-labor "Yellow Envelope Bill" ahead of its passage in parliament, industry sources said Sunday.

Villarreal made the request Thursday during a meeting between labor ministry officials and executives from the automobile, shipbuilding and steel industries, according to the sources.

Expressing serious concerns over the bill, Villarreal reportedly said Korea already carries high risks in corporate-labor relations and warned that parent company General Motors may reassess its Korean operations if the legislation is adopted.

While stopping short of directly mentioning a withdrawal, he hinted that GM Korea would no longer serve as a core production base in Asia for global markets under the new law, the sources said.

Speculation about a possible GM exit has been growing amid sluggish sales, a lack of new models and a 25 percent U.S. tariff on imported vehicles imposed in April.

The tariff was cut to 15 percent in late July after last-minute negotiations in exchange for Korea's $350 billion investment pledge in the United States.

GM Korea ships about 85 percent of its exports to America, with vehicles assembled at its plants subject to U.S. tariffs.

The automaker operates two factories in Korea: one in Bupyeong, west of Seoul, which produces the Trailblazer SUV, and another in Changwon, which manufactures the Trax Crossover for both domestic sales and exports.

On Sunday, the National Assembly passed the Yellow Envelope Bill, which amends the Labor Union Act to guarantee the bargaining rights of subcontracted workers. The bill also bans companies from filing damage suits or seeking provisional seizures against unionized workers, a practice that critics say has been used to suppress strikes.

Business lobbies strongly opposed the legislation, arguing it could create workplace confusion and encourage collective action over corporate business decisions, including overseas investments.

In 2018, GM considered pulling out of Korea but pledged to stay for at least 10 years after the government injected 810 billion won ($750 million) in public funds.

However, the automaker shut its Gunsan plant, about 180 kilometers south of Seoul, in the following year due to weak demand.

In May, GM Korea announced plans to sell some of its after-sales service centers and production facilities as part of restructuring, further fueling concerns over its long-term commitment to the Korean market.

Yonhap