Unionised workers at the South Korean unit of GM have launched an all-out strike for the first time in more than two decades, demanding higher wages and protesting against the US carmaker’s restructuring plans in the east Asian nation.

The 8,000-strong union at GM Korea downed tools on Monday at all three of its plants in South Korea and plans to continue the strike through Wednesday, expressing opposition to potential lay-offs due to declining production volumes.

The company has no production plan for one of its two plants in Incheon after 2022, so “we are worried about massive lay-offs that are likely to happen then”, said Dang Sung-geun, a union spokesman.

The strike is the union’s first full-scale action since GM acquired the now-defunct Daewoo Motors in 2002. Its last such labour action was in 1997 under Daewoo.

South Korea was once a key production centre for GM’s compact vehicles, but sales have slumped in recent years since the carmaker withdrew its Chevy brand from Europe, and as consumer preferences shift from sedans to large sports utility vehicles and pick-up trucks.

The union is demanding a 5.7 per cent increase in basic monthly salary, one and a half months of wages in incentives, and a cash bonus of Won6.5m ($5,400) per worker.

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GM Korea has refused, citing huge losses at the unit, where accumulated net losses over the past five years have totalled nearly Won4tn.

In contrast, rival Hyundai Motor averted labour action for the first time in eight years, as its union agreed to its smallest wage increase in a decade.

The three-day strike is expected to cause GM Korea production losses of nearly 10,000 vehicles.

Julian Blissett, senior vice-president in charge of GM’s international operations, visited South Korea last month and said headquarters was “disappointed” with the union’s decision to go on strike. But he said GM could compensate by making up for lost production at the carmaker’s plants in other countries.

GM Korea sold 462,871 vehicles last year, down 12 per cent from 2017. The carmaker closed one of its four plants in South Korea last year and cut headcount in the country by nearly 20 per cent as part of a global downsizing of unprofitable operations. The labour dispute casts a further cloud over the company.

State-run Korea Development Bank offered $750m to GM last year to keep the US auto group in the country, while GM agreed to inject $6.4bn into its struggling South Korean unit over 10 years.

However, the union remains concerned that the US automaker may close a second plant, the one in Incheon, west of Seoul, in 2023. GM Korea’s sales fell 6.2 per cent to 287,540 vehicles in the first eight months of this year, from the same period a year earlier.

“It seems difficult to turn around the lossmaking business here,” said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics & Trade. “GM will likely wind down its Korean operations in the long term.”

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