GM Questioning Future of South Korean Operations

Given Barra's bold moves to streamline GM operations globally, including selling Opel in 2017 and withdrawing from the Russian market, it initially looked as though the company was preparing to call it a day in Korea. GM President Dan Ammann told Reuters, "Time is short and everyone must move with urgency".

GM has three other plants in South Korea and employs 15,663 workers in the country, a spokesman said.

Opposition lawmakers criticised Moon's administration on Tuesday for the potential job losses from GM's strategy for the country.

"We have a very bad trade deal with Korea", Trump said during a meeting with a bipartisan group of lawmakers to discuss steel and aluminium imports.

Besides truncating a large portion of the factory space, GM is also taking charge of $850 million, which also includes $475 million of non-cash asset impairments and up to $375 million of primarily employee-related cash expenses. The company exported Chevrolet cars to Europe before GM pulled the Chevy brand from that market in 2013, putting strain on the Korean business.

GM is in talks with South Korean government officials about ways to make GM's Korean operations profitable.

In its emailed announcement, Barry Engle, president of GM International, added that the carmaker was going to make "important decisions on next steps" by the end of February, urging key stakeholders, including the government and the labor union, to make progress in the ongoing discussions.

South Korean officials will hold talks with GM about ways to keep the carmaker's operations open, the finance ministry said in a statement Tuesday.

The plant shutdown is part of its broader Asia business restructuring.

South Korea was for years a low-priced export hub for GM, producing close to a fifth of its global output at its peak.

Rising labor costs and weak demand for the small cars it builds in the country put a strain on GM's Korean operations.

The automaker's decisions to exit other unprofitable markets have exacerbated problems for GM Korea, which used to build numerous Chevrolet models GM once offered in Europe.

The automaker's decisions to exit other unprofitable markets have exacerbated problems for GM Korea, which used to build numerous Chevrolet models GM once offered in Europe.

GM saw the acquisition as an opportunity to produce both for the booming Korean domestic market while also exporting vehicles to the USA and other markets with high labor costs. GM Korea sold 132,377 vehicles in its home market a year ago while exporting roughly 390,000 vehicles to 120 global markets, according to Automotive News.

According to media in South Korea, GM wants to get help from the authorities in the form of tax incentives or the Korean Development Bank's involvement in the planned capital injection to support the company's local division.

GM isn't ready to give up on Korea, however. China's SAIC Motor Corp. owns 6 percent, while GM has the remainder.

Vanessa Coleman

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