GM may reconsider Korea operations with 'Yellow Envelope Bill,' CEO says

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GM may reconsider Korea operations with 'Yellow Envelope Bill,' CEO says

Published: 25 Aug. 2025, 15:44

Audio report: written by reporters, read by AI

Hector Villarreal, president of GM Korea, delivers remarks during the media launch event for Cadillac’s new Escalade SUV at Ivex Studio in Gwangmyeong, Gyeonggi, on April 16. [NEWS1]

The passage of the pro-labor “Yellow Envelope Bill” in the National Assembly has reignited speculation that GM Korea may withdraw from the country after President and CEO Hector Villarreal warned that Detroit could reconsider its operations here.

Villarreal made the remarks at a meeting with the Ministry of Employment and Labor and chief executives of automakers, shipbuilders and steelmakers on Thursday.

Korea already carries a high risk of labor disputes, he reportedly said, adding that headquarters may reassess its Korean business.

GM Korea also formally asked the government to reconsider the new legislation on the same day.

Industry insiders say the law could raise the likelihood of labor-management clashes at foreign carmakers.

The amendment expands the scope of legitimate union strikes from disputes over “wages and working conditions” to “all working conditions,” which may now include restructuring or plant relocations.

The concern is acute for GM Korea, which has faced frequent labor unrest.

When the company announced plans in May to sell nine of its directly operated service centers, the union strongly opposed the move. Wage and collective bargaining talks have also repeatedly led to strikes and production disruptions.

“If the level of conflict rises under the new law, management uncertainty at GM Korea could grow further,” said one business group insider.

Union representatives counter that management has prioritized asset sales while neglecting future planning.

One official said the company has not shown “any sign of seriously considering new model launches or labor negotiations as part of the future of its Korean business.”

The Chevrolet logo is seen on a vehicle on the lot of a Chevrolet dealer in Fenton, Missouri, on Aug. 7. [AP/YONHAP]

GM’s possible exit from Korea has been raised several times in the past. This time, analysts say weakened business conditions give the threat more weight.

A key blow came from U.S. tariffs. Washington imposed a 25 percent levy on imported cars in April, with a 15 percent rate applied to Korean vehicles under a pending adjustment. That effectively strips GM Korea of the duty-free benefit it had enjoyed under the Korea-U.S. FTA.

The automaker is particularly exposed because about 90 percent of its output is exported to the United States. Domestic sales remain weak, accounting for just over 5 percent of annual volume last year, or 24,824 units, and continuing to fall. Domestic revenue slipped below 1 trillion won ($721 million) last year.

Further uncertainty looms as a 2018 agreement between GM and the state-run Korea Development Bank nears expiration.

After GM shut its Gunsan plant that year, the government injected 810 billion won into the company in return for a pledge to stay in Korea for 10 years, in an intervention aimed to preserve jobs. That commitment ends in late 2027.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YOUNG-WOO [[email protected]]