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GGM, Korea's first car plant in decades, completed
2021-05-05
Korea has completed its first automobile factory in 23 years, with the ribbon cutting ceremony held for Gwangju Global Motors (GGM) Thursday.
Work on joint venture between the Gwangju local government and Hyundai Motor began two years ago when the deal was signed.
GGM “is an automotive plant that will realize the Gwangju job model, which is desperately needed for the region,” President Moon Jae-in said during the ceremony held in Gwangju. “Born of a major social compromise between the Gwangju citizens, the local government and both businesses and labor, it is the future of Gwangju and the future of Korea.”
Emphasizing that the joint venture is the first of its kind, President Moon said it will set the standard for a balanced Korean economy.
“It is an attempt to create an economy where laborers and companies could grow together where people and workers are respected and new jobs are created through cooperation between business and labor,” Moon said.
The joint venture between Gwangju city and Hyundai Motor has been touted by the government as a success of cooperation between the local government, the private sector and the labor union.
The last auto plant built in Korea was finished in 1998, when then Samsung Motors completed a factory in Busan.
All of the equipment and machinery at GGM have been localized, and the plant is operated through a smart system.
The country’s first mini SUV — currently labeled the AX1 — will be rolling off of GGM’s production line in September.
Gwangju city owns 21 percent of the company, while Hyundai Motor owns 19 percent.
A total of 575.4 billion won ($519 million) is to be invested in GGM over the next three years.
The plant is capable of producing 70,000 mini SUVs annually and plans to increase the number of total regular employees to 908 by next year.
Currently 385 employees have been hired, of which 70 percent are people in their 20s and 30s living in Gwangju and surrounding areas.
The Gwangju government estimates 11,000 indirect jobs, including those in neighboring restaurants and other small business, will be created as well.
GGM was the first example of a local government, a private company and the labor union coming together to build a regional company with the goal of boosting the regional economy and creating jobs for local residents.
Labor costs are relatively low, with the starting salary of employees at GGM set at 35 million won. The employees work eight hours a day, 40 hours a week.
It took the three interest groups four years to reach an agreement.
Since the so-called Gwangju job model was developed, seven additional joint ventures were created between local governments and private companies with the support of the local labor unions, in cities such as Busan and Daegu.
The government estimates that 12,000 direct jobs will be created in the eight regions including Gwangju. When including indirect jobs, that figure increases to 130,000.
Total investment is expected to amount to 51.1 trillion won.
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