Daewoo Motor Supplier Boycott Talks Stalled

SEOUL, Sept 6 Reuters reported that talks to end a boycott by the main parts supplier to South Korea's Daewoo Motor made little progress on Friday, Daewoo officials said, fanning concerns the dispute could knock a joint venture with General Motors off track.

Most parts suppliers agreed to end a week-long boycott on Wednesday, but production at the country's third-largest carmaker remains paralysed because Korea Delphi Automotive Systems, which supplies 20 percent of Daewoo's parts, is holding out.

"We are still talking," Kim Sang-won, a Daewoo Motor spokesman, said referring to the carmaker, its creditors and Korea Delphi.

"There has been no progress from where we started."

Korea Delphi, a joint venture between U.S. firm Delphi Corp and former Daewoo units, initiated the supply stoppage over $700 million unpaid bills to about 190 suppliers.

Delphi makes key auto parts, such as brake, steering and airconditioning systems.

"There is no reason we should end the boycott when creditors do not want to soften their position," said Kim Ki-ho, an official at Korea Delphi's planning division.

He said out of 305 billion won ($258.2 million) in unpaid bills, creditors had so far paid his firm only 90.8 billion won.

"We want to see how creditors intend to pay," he said. "They remain ambiguous. Besides, they are discriminating against us compared with other suppliers because of our ties with Daewoo companies."

Creditors want to halve parts suppliers claims and think Korea Delphi should cut its demand further.

"It makes no sense Korea Delphi wants the same payment scheme as others," said an official at the main Daewoo Motor creditor Korea Development Bank "It should take a heavier burden sharing because it is closely related to the bankrupt Daewoo Motor."

Other parts suppliers remain unhappy despite Wednesday's agreement to end the boycott. Analysts said they only agreed to end the dispute because of fears a protracted work stoppage would only aggravate their already fragile finances.

GM SAYS JOINT VENTURE ON COURSE

Creditors also feel bitter because they have spent over $2 billion to keep Daewoo afloat since 1999 and written off about $15 billion in loans extended to Daewoo when it entered court receivership in November 2000.

GM agreed in April to lead a $400 million investment for a controlling stake in a new Daewoo Motor.

Analysts are concerned the dispute with the parts makers could delay the joint venture, although the world's largest automaker says it is on course.

"Despite Delphi's boycott, we will go ahead with our plan to launch the new Daewoo Motor as scheduled in late September or early October," said Kim Jung-soo, vice president of the joint venture. He added the bright future of the new firm would induce an early settlement to the dispute.

GM's investment in Daewoo offers new life to the ailing firm and will boost GM's scant presence in South Korea as well as sales across Asia, where it has holdings in Japan and China.