GM Korea to Close Gunsan Plant open the window of AOD

Write : 2018-02-18


Major U.S. automaker General Motors(GM) has decided to close one of its four plants in South Korea. The South Korean government expressed deep regret over the decision and pledged to conduct an objective and transparent inspection to normalize management.
General Motors said in a press release Tuesday that it will shut down its vehicle assembly plant in Gunsan, North Jeolla Province by the end of May.
The closure is expected to affect some two-thousand workers who produced about seven percent of the 520-thousand vehicles manufactured by GM Korea last year.
The government plans to continuously consult with GM on ways to normalize its business operations, considering the impact on jobs and the local economy.
GM Korea Chief Executive Kaher Kazem said the measure is a difficult but necessary first step in its efforts to restructure operations in South Korea.
A GM Korea official said the decision came after concluding that it's impossible to pursue a turnaround while maintaining all production equipment.
The Gunsan facility, which had been producing the Cruze compact car and the Orlando multi-purpose vehicle, has been operating at below 20 percent of capacity over the past three years.
Trade, Industry and Energy Minister Paik Un-gyu said the government will decide on whether to provide financial support to GM Korea after reviewing the automaker's plans on fresh investment and restructuring.
But he said he cannot make any commitments as the firm has not presented specific plans on its new investment.
GM Korea had been a major supplier of Chevrolet cars to Europe, but GM's decision to kill the brand in that market in 2013 strained its finances. The South Korean subsidiary is estimated to have incurred a net loss of up to three trillion won during the past four years.
The company's exports of fully built cars fell ten percent in 2016 and another six percent last year. However, wages continued to rise.
GM President Dan Amman said the company's stay in South Korea in the long term will depend on the provision of funds or other incentives from the Korean government as well as an agreement from workers to cut labor costs.
Gunsan city was dealt a blow last year when Hyundai Heavy Industries' shipyard closed in July. Hyundai and GM had accounted for 60 to 70 percent of the local economy.
Some say the latest incident was a matter of time and blamed the high cost structure of Korea’s automobile sector.

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