[Chodong's View] What Must Be Done to Hear "We Can't Give Up Korean Factories" in 10 Years

Concerns Over "Manufacturing Departure from Korea" Amid Declining Workforce
Caught Between U.S. Automation and Cheap Chinese Labor
AI Factories Must Be the Breakthrough

Will General Motors (GM) leave Korea? The domestic automotive industry is facing a major challenge. The confusion now extends from GM Korea (Korea GM) workers to more than 3,000 partner companies and consumers. Korea GM has announced plans to sell nine directly operated service centers and idle assets at the Bupyeong plant, fueling speculation that the company may withdraw from Korea within the next two to three years. On the other hand, some believe GM will not pull out, given that models produced exclusively in Korea are selling rapidly in the United States.

Amid this uncertainty, the Korea GM labor union has begun a vote to decide whether to take industrial action related to collective bargaining. The union has stated that it is prepared to strike depending on the outcome of the vote. Although labor and management agreed to increase production by an additional 30,000 units this year due to higher-than-expected sales in the first half, this agreement is now at risk of falling apart.

It is difficult to discuss the causes without mentioning the tariff war initiated by the United States. Facing high tariffs, GM has little choice but to reduce overseas production and increase production within the United States. As a result, GM has decided to invest $4 billion (5.47 trillion won) in its U.S. factories over the next two years and increase U.S. production from 1.5 million to 2 million vehicles.

In contrast, for popular models produced in Korea, GM is expected to endure the tariff burden for the time being by securing additional supply through increased production. Instead, the company appears intent on actively utilizing non-core assets to reduce its financial burden. This explains why Korea GM is simultaneously pursuing increased production and asset sales, resulting in unpredictable moves.

What we must recognize here is that the trend of "manufacturing departure from Korea" could continue beyond just Korea GM. This is why it is urgent to address the chronic and structural problems facing Korean manufacturing.

Let us look at another example from Korea GM. Both the Trax Crossover and Trailblazer are models developed and produced in Korea, and they are enjoying strong popularity in the U.S. market due to their affordable prices. This demonstrates that wages in Korea are lower than in the United States. However, this competitive edge will soon disappear due to rapid aging and a shrinking workforce.

The situation is even more serious when compared to China, which has emerged as a manufacturing powerhouse. According to a report by Samsung Securities, the hourly wage at Hyundai Motor's U.S. plant was $65 in 2023, compared to $38 at its Korean plant. By contrast, the hourly wage at Tesla's highly automated U.S. plant is $45, while its Shanghai plant in China pays just $7 per hour.

If Korea's manufacturing sector cannot find its own strengths between advanced automated factories and China's cheap labor, how can companies be convinced that operating factories in Korea is profitable?

Recently, the government launched the AI Factory Project, which integrates artificial intelligence (AI) and robots into various manufacturing sites. It has also begun pilot projects in which humans and humanoid robots collaborate. Many companies have expressed concerns about the initial costs of adopting AI and robots, the difficulties of system integration, and the lack of operational personnel. It is hoped that this project will serve as a catalyst for companies in need.

Fears that robots will take jobs are a luxury. Workers must recognize that without improved productivity, job security is impossible. They must consider what roles are needed in the process of automation and robot adoption. Ultimately, robots still require human involvement. If we hesitate, we may find ourselves competing not with workers from other countries, but with robots, in just ten years.