Kaher Kazem, the new CEO of GM Korea, has assured employees the parent company has no plans to quit Korea. Leaders of the GM branch of the Korean Metal Workers Union are not so sure.

Their concerns are based on GM’s move to consolidate all of its international operations except China into a new organization headed by Barry Engle, currently corporate executive vice president and president of GM South America.

Consolidating Asia Pacific operations with those in South America with a new management structure and a mission of optimizing performance at all GM overseas operations likely will entail cost-cutting and increasing productivity at all of the Detroit automaker’s unprofitable or marginal properties, including those in South Korea.

Currently, 17.02 % of GM Korea shares are owned by the Korea Development Bank, which has a seat on the board and veto power over any move to downsize or sell off major assets. Its 15-year veto power ends Oct. 17, raising speculation by KMWU officials that GM may scale

back, if not terminate, GM Korea operations once the parent company has the latitude to do so.

Many analysts think the union speculation may have some substance, and a drastic downsizing of money-losing GM Korea makes good business sense.

Short of boosting production to optimum levels by assigning models built elsewhere to GM Korea’s underutilized, high-cost plants, the chances of realizing a profit based on the company’s current performance are considered remote.

When Kazem took over Sept. 1 as CEO, he immediately met with KMWU leaders and sent messages to all employees outlining GM Korea’s tenuous financial condition. He explained the automaker has lost money in three consecutive years, with a cumulative net loss of 1.97 trillion won ($1.7 billion).

Kazem asked for everyone’s cooperation in improving efficiencies and hiking productivity.

He also stressed GM has no plan for abandoning Korea, instead pledging GM Korea was a valued affiliate important to overall international operations.

He did not say so, but GM Korea currently cannot negotiate acceptable credit instruments with local banks in Korea because of its losses and potential for continued losses. For its borrowing, the automaker has turned to GM Holdings to acquire credit instruments at competitive interest rates and non-restrictive terms.

Instead of providing Kazem with the cooperation he asked for, the union leadership called a partial strike. It was staged the day before he held a news conference to give public assurances that GM Korea has a good future.

Kazem then asked KMWU negotiators to meet with him Sept. 15 for a ninth round of wage negotiations that had begun in April. Union bargainers refused to meet with management and ramped up the partial strike.

Kazem came to GM Korea from India, where he had served as managing director of GM’s India operations. There he oversaw the sell-off of the main production center in Talegaon to Chinese automaker SAIC and the conversion of GM India’s other plant in Halol to a producer of kit cars earmarked for export only.

Thus, union leaders see Kazem as a restructuring specialist who was sent to GM Korea to shrink operations, possibly ahead of a complete pullout.