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| Laid off Gates Korea workers hold a rally in front of the Daegu City Hall, May 13, to protest the management’s shutdown of its factory in the city last year. Courtesy of the Korean Metal Workers’ Union |
By Park Jae-hyuk
The former workers of Gates Korea, who lost their jobs a year ago following the decision by Gates Global ― owned by the Blackstone Group ― to close its automotive mechanical rubber plant in Daegu, are planning to hold a sit-in near the U.S. private equity firm’s (PEF) Seoul office. The Blackstone Group’s Seoul office is set to reopen seven years after its closure in 2014.
Their probable protest in Seoul is emerging as a potential threat to Blackstone, which is seeking to expand its presence in the Korean market lately.
Earlier this year, private equity industry insiders said that Blackstone was trying to reopen its Seoul office by the end of this year in collaboration with a law firm, as it is enticed by opportunities in Korea’s competitive alternative investment markets. Although the foreign firm has yet to make any official announcement about the reopening of its Seoul office, it recently recruited analyst-level investment professionals, who will work here to handle Korea-focused transactions.
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| Blackstone Group’s recent job posting on LinkedIn. Screenshot from LinkedIn |
Chae Boong-suk, the leader of the workers dismissed from Gates Korea, said they will hold protests in different locations in the Seoul metropolitan area, including near the National Assembly building and Blackstone’s local office, if their latest request for talks is rejected.
At this moment, they are focusing on doing a sit-in at Daegu City Hall, which began May 13.
“Blackstone has never contacted us directly,” Chae said. “The city government and labor authorities asked on behalf of us to hold negotiations with the management’s legal representative, Kim & Chang, last Thursday, but we have yet to receive an answer.”
The year-long conflict over Gates Korea broke out after the management announced the sudden shutdown of its Daegu factory to its 147 employees in June of last year, saying that the COVID-19 pandemic hastened a large-scale restructuring intended to improve the business efficiency of its global operations.
The workers put the blame on Blackstone, which acquired the U.S.-based Gates from Onex and the Canada Pension Plan Investment Board for $5.4 billion in 2014.
Based in Denver, Colorado, the auto parts manufacturer has over 100 factories in 30 countries, including Korea. Gates Korea is a joint venture between Gates, with a 51 percent stake, and Japan’s Nitta, which holds the remaining 49 percent.
The laid-off workers have claimed that the foreign capital firm is avoiding its social responsibility here, even though it was exempt from acquisition and property taxes for building a factory in Korea, and distributed a significant amount of its dividends to its overseas shareholders.
The workers are calling for the government and the ruling party to punish Blackstone and Gates Korea by reclaiming tax incentives given to them and taking legal action against their “unilateral decision.”
The workers also condemned Kim & Chang in May. They allege that a judge at the Daegu District Court, who had previously worked for the law firm, intentionally refused to accept their objection to 340 million won ($307,000) in damages claimed by the management, because the latter were represented by his former law firm.
Blackstone has yet to comment officially on the ongoing dispute concerning Gates Korea. However, its local PR agency explained last year that the PEF had nothing to do with the factory closure, saying that the decision was made by Gates and Nitta.
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