GM Korea is the Latest Target In the Company's Cost Cutting

This past year has seen General Motors not be shy with scaling back operations in various international markets. The company sold off Opel/Vauxhall to PSA Group, ended sales of Chevrolet vehicles in India, and closed down their operations in South Africa. Now, GM's Korea operations are on the chopping block.

Last week, GM CEO Mary Barra revealed that company officials were in discussion with minority owners and union officials that could lead to "some rationalization actions or restructuring."

"We're going to have to take actions going forward to have a viable business," said Barra during a conference call talking about GM's 2017 financial results.

Sales of GM vehicles in Korea have dropped 20 percent, while manufacturing costs have increased. This has made South Korea a poor place to export vehicles to other markets.

This week, GM announced that it will shutter the Gunsan plant (one of the four plants operating in South Korea). The plant employs 2,000 out of the 16,000 workers employed at GM Korea. GM said the reason for the closure came down to high labor costs and low output. The plant only operated at 20 percent of its capacity last year according to Reuters. Unsurprisingly, the news angered the South Korean government and workers at the plant. 

“The government expresses deep regret over GM’s one-sided decision to suspend and shut down” the plant, the finance ministry said in a statement.

The ministry said it wants to conduct an audit of GM's operations help with the restructuring plan.

As for workers at Gunsan plant, workers staged a protest yesterday, declaring the move a “death sentence”, and threatening a strike.

“Let’s protect our right to live on our own,” said Kim Jae-hong, the leader of the workers’ union at the Gunsan branch.

A GM Korea spokesman said the company "would continue discussions with the union and seek their understanding over the closure plan." Workers though aren't fully buying this.

“We can’t accept this. The company informed us about the closure plan, not asking for our opinion. It was already the end of the discussions,” Dang Sung-geun, a senior official at the union of GM Korea told Reuters.

“This is like a death sentence notice before the Lunar New Year holidays.”

Source: Automotive News (Subscription Required), Bloomberg, Reuters (2)