New auto allocation seen as key to survival of GM Korea

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The official with direct knowledge of the matter said GM had asked South Korea to inject funds into GM Korea through state-run Korea Development Bank (KDB), which holds a 17 percent stake in the unit.

The proposed $2.8 billion investment is part of the turnaround plan GM has worked up, and does not include a $2.7 billion debt-for-equity swap that would be offered the government in return for financial aid.

"By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM's headquarters", said Paik Un-gyu.

Finance Minister Kim Dong-yeon told reporters on Tuesday that the government would "closely consult with GM to normalise its management", adding that a due diligence on the company should come first. Last week, the USA automaker announced it would shut down a factory in Gunsan, southwest of Seoul, and said it was mulling the fate of its three remaining plants in South Korea.

"To secure an output volume of new vehicles that will keep GM's remaining plants in Korea operational, the company's union is required to accept a steep reduction in wages, bonuses and welfare benefits among other things", a GM Korea spokesman said over the phone.

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During a discussion on trade with South Korea last week, Trump claimed that his policies were responsible for GM's Gunsan plant closure, and suggested that the automaker would move jobs "back from Korea to Detroit". The union leader said in an interview that he believed in the possibility of GM leaving the country.

Lim said the union will discuss a full strike and other options at a meeting on Thursday. "We don't want to go as far as a full strike". Outreach efforts will be made to make clear that South Korea's imports of Chinese steel do not target the U.S. market.

Following a meeting with a task force headed by Korea's ruling party on Tuesday, the president of GM's worldwide operations, Barry Engle, said the company wanted to stay in Korea and fix the business.

Last week, the local carmaker's parent, General Motors Co., announced it will shut down its underutilized plant in Gunsan, one of the automobile giant's four vehicle assembly plants in South Korea.

Seoul's inclusion in the list is frustrating since other close allies of the United States such as Canada, Japan and Germany, were excluded from the extra tariff though they are among the top 10 steel exporters.