Things aren’t rosy for General Motors in South Korea – the American automaker said its loss-making operations in the country is set to file for bankruptcy if its union did not agree to cut labour costs by April 20, Reuters reports.

Having announced last month it was shutting down one of its four South Korean factories (which are located in Gunsan, Boryeong, Changwon and Bupyeong-gu), GM said union concessions as well as government support were needed for it to remain operating in the country.

President of GM International Barry Engle reportedly told the GM Korea’s union leader that these concessions were needed for it to present a turnaround plan to the government by April 20.

If GM Korea – formerly known as GM Daewoo prior to 2011 – failed to present the plan by that date, it would have no choice but to file for bankruptcy. The company added that it also needs to secure US$600 million (RM2.34 billion) in operating funds by the end of April.

Clockwise, from top left, Chevrolet Aveo sedan, Malibu, Orlando and Aveo hatchback.

The automaker has already achieved cost cuts of over 500 billion won (US$470 million, RM1.8 billion) through union concessions on wages and bonuses and voluntary redundancies, but still wants the union to agree to cut benefits worth US$74-$84 million (RM285-RM324 million), a union official said. The union said earlier this month that it will not demand any pay rise and bonuses this year, but is looking at the company to provide a future production plan and job security.

The South Korean operation – which employs nearly 16,000 people – plans to slash 5,000 jobs or about 30% of its workforce. It will however keep production steady if the government provides support and agrees to the automaker’s proposal for the loss-making operation, according to a document seen by the news agency recently.

Almost 2,500 workers, equivalent to 15% of the staff count, have applied for a redundancy package that the automaker is offering as part of a drastic restructuring. The company said it may also consider more voluntary redundancies for the remaining 680 workers at its Gunsan factory, but added that layoffs were the last option.

The South Korean operations produces models such as the Chevrolet Aveo, Spark and Orlando. It also assembles other Chevrolet models like the Cruze, Malibu, Trax and Impala. GM owns 77% of GM Korea, with Korea Development Bank owns a 17% stake. The remaining 6% is held by GM’s primary Chinese partner SAIC Motor.