GM Korea restructuring concerns resurface after labor law revision

(News1)

Speculation that General Motors Co. may scale back or withdraw from South Korea has resurfaced following the passage of a labor union law in August 2025 alongside renewed industrial action by the company’s union.

GM Korea Co. Chief Executive Officer Hector Villarreal reportedly urged the Korean government to reconsider the legislation during a meeting convened by the Ministry of Employment and Labor with executives from the auto, shipbuilding, and steel industries in August 2025. The amended law broadens the scope of worker protections, including limits on companies’ ability to seek damages from strikes - a change that observers warn could intensify labor-management conflict. The GM Korea labor union began a three-day partial strike on Monday, staging four-hour work stoppages each day and adding to the tensions.

Former GM Korea CEO Kaher Kazem

The renewed uncertainty reflects the long-standing friction between former GM Korea CEO Kaher Kazem and law enforcement authorities over repeated overseas travel bans tied to illegal dispatch allegations. Kazem’s travel restrictions began in 2019, when the Ministry of Justice barred him from leaving the country amid an investigation into the company’s subcontracting practices. While GM Korea cited the subcontracting law to justify outsourcing certain assembly work, the courts ruled that in-house subcontracting amounted to an “illegal dispatch” under company control. The government pressed GM Korea to directly hire 1,720 subcontracted workers as regular employees from 2018, but, burdened by the closure of its Gunsan plant and mounting losses, the company did not comply.

After 16 months under restriction, Kazem won a case at the Seoul Administrative Court in April 2021, but prosecutors and the Justice Ministry quickly appealed and reimposed the ban. The measure was lifted only when the ministry withdrew its appeal.

The issue flared again in 2022, when GM headquarters appointed Kazem as executive vice president of Shanghai GM. The Justice Ministry reinstated the travel ban, preventing him from taking the post. The move drew public criticism as excessive pressure on corporate activity, leading the ministry to eventually lift the ban. GM headquarters at the time expressed regret, and the controversy subsided.

Against this backdrop, GM headquarters is keeping its restructuring options open. During an earnings call in the United States on August 13th, General Motors Chief Financial Officer Paul Jacobson said that of the $5 billion in tariff impact GM faces globally, about $2 billion stems from GM Korea, adding that the company will take any measures necessary to secure profitability in Korea in the same way it did in China.