Georgia Governor Brian Kemp has expressed his strong opposition to the federal government’s decision to block subsidies under the Inflation Reduction Act for Korean companies such as Hyundai Motor and Kia. He criticized the Biden administration for denying these benefits, stating, “If Washington will not help, I am considering providing support through state funding.”
This comes as a significant concern for Georgia, where Kia has played a pivotal role in revitalizing the local economy during the 2009 financial crisis by establishing a plant in West Point, a city that was struggling after its textile industry had collapsed. The positive impact of Kia’s presence is so notable that locals displayed banners to express their gratitude for the automaker’s investment.
Furthermore, in March 2023, Hyundai Motor Group celebrated the completion of its Metaplant America, an advanced facility for electric vehicles in Savannah. At the inauguration ceremony, Kemp encouraged further investment, emphasizing, “We should hold shovels for expansion, not just scissors for a ribbon cutting.”
To attract foreign investment, particularly from South Korea, Georgia reduced its corporate tax rate from 6 percent to 5.75 percent in 2019 and provided free industrial land to Korean firms. In response to rising logistics demands, state and federal authorities also agreed to finance an $80 million new airport to support the plant.
Under both the Trump and Biden administrations, South Korea has emerged as the largest investor in the United States, committing a staggering $160 billion over the past eight years. This investment includes $53 billion in battery production, $43 billion in semiconductors, and $25 billion in the automotive sector, which has resulted in the creation of approximately 830,000 jobs in the U.S. This figure surpasses the total manufacturing jobs in cities like Ulsan, Changwon, and Geoje combined.
Recent trade negotiations have also resulted in an additional promised investment of $350 billion, with $150 billion allocated for shipbuilding and $200 billion earmarked for areas such as semiconductors, nuclear energy, batteries, and biotech. These investments could potentially create more than 1.6 million American jobs, although they may lessen job opportunities in Korea as production increasingly shifts abroad.
Domestically, the Democratic Party is pushing to pass the controversial Yellow Envelope Act on August 4. This legislation seeks to amend certain articles of the Trade Union and Labor Relations Adjustment Act and has been met with opposition from domestic business groups as well as the European Chamber of Commerce in Korea and the American Chamber of Commerce in Korea. Critics warn that the law could spur an exodus of corporations from Korea.
In the labor landscape, Hyundai Motor’s union has presented some of its most ambitious demands in years, including a one-time bonus of 20 million won (approximately $14,500) per employee for retroactive ordinary wage payments, costing the company an estimated 820 billion won. Other demands include raising the retirement age from 60 to 64 and the introduction of a four-and-a-half-day workweek without any reductions in pay.
Labor activists aim to extend these benefits across various industries, potentially leading to legislation similar to the Yellow Envelope Act. As regulations become entrenched, they are often difficult to amend, regardless of potential negative economic impacts. While employees at large corporations may gain from these measures, the overall employment landscape could worsen, resulting in layoffs, fewer opportunities for younger job seekers, and increased economic polarization.
Firms facing escalating costs and regulatory pressures are likely to consider moving operations overseas or shutting down altogether, echoing the cautionary tale of General Motors Korea. In 2018, GM closed its Gunsan plant, and its Bupyeong facility now faces a 15 percent tariff on exports that were previously exempt. Even U.S. companies may struggle to sustain their Korean operations under unfavorable tariffs. The lesson is clear: when capital exits, both job opportunities and workers’ rights diminish, a reality that seems overlooked by those in charge of the National Assembly and labor unions in the country.
image source from：koreajoongangdaily
