GM Korea in a shareholders' meeting on Friday decided to establish a research and development company despite opposition from workers and state-run Korea Development Bank, its second-largest shareholder.
KDB says it cannot understand why GM Korea needs to establish an R&D company here now instead of putting its promised investment into the manufacturing operation, and the workers fear the move is a precursor to massive layoffs.
Incheon Mayor Park Nam-chun joined the feud by threatening to take back land it gave GM for a test track if the automaker goes through with the plan.
Park in a Facebook post on Sunday said, "I've instructed my legal team to look into the legality of the city taking back the land. Incheon provided the land in the hope that GM would contribute to developing the automotive industry and job creation in the region. If GM Korea's union and the public do not support the spin-off of the unit, we will take steps to get the land back."
In 2004, Incheon agreed to let GM use the 410,000 sq.m land in the city's Cheongna free economic zone for free for 30 years, extendable for another 20 years. GM Korea spent around W100 billion on a test track and R&D center there, which opened in September 2007 (US$1=W1,133). More than 500 research staff work there.
Around 30 interest groups in the city demanded city officials take steps to prevent the establishment of the R&D unit, while KDB has threatened to take legal action.
Unionized workers have voted to strike if the National Labor Relations Commission decides to halt meditation efforts in a meeting on Monday.