GM will shut a South Korean plant, more cuts could follow - Mr Ammann
GM President Mr Dan Ammann told Reuters that General Motors Co will close one of four vehicle assembly plants in South Korea, and will decide the future of the remaining operations within weeks, based on the outcome of talks with the government and labour unions. GM said in a statement it will take charges against profits of USD 850 million to reflect the costs of restructuring its money-losing South Korea operations, including USD 375 million in cash related to employee costs. Most of the financial writedowns will be recorded by the end of the second quarter.
Mr Ammann said that "Time is short and everyone must move with urgency." He said that GM will announce plans to close its compact vehicle assembly plant in Gunsan, which employs about 2,000 workers,. That factory built just 33,982 vehicles in 2017, or about 20 percent of its full production capacity, GM said.
The automaker's three other assembly plants in South Korea built 485,403 vehicles last year. GM sells Chevrolet and Cadillac brand vehicles in the Korean market, and more than half the vehicles built by GM's Korean plants are exported.
GM's move to shrink its South Korean operations is the latest in a series of steps over the past three years to put profitability and investments in new technology ahead of sales and production volume. GM has since 2015 exited unprofitable markets in rapid succession, including Europe, Australia, South Africa and Russia.
Ms Mary Barra, GM Chief Executive said that she will focus GM's engineering and capital on profitable markets, mainly the United States and China, and new technologies such as electric and automated vehicles.
The automaker's decisions to exit other unprofitable markets have exacerbated problems for GM Korea, which used to build many of the Chevrolet models GM once offered in Europe. Declining sales of small cars in the U.S. have also hurt demand for Korean-made Chevrolets.
Mr Ammann said that GM's long-term presence in South Korea will depend on the government's willingness to offer funding or other incentives, and on whether Korean unions will agree to cut labour costs.
GM is in talks with South Korean government officials about ways to make GM's Korean operations profitable. South Korea's state-run development bank owns a 17 percent stake in GM Korea. The Detroit automaker owns 77 percent of the operations while GM's main Chinese partner, SAIC Motor Corp Ltd, controls 6.0 percent.
Source : Reuters