General Motors will reduce engine production by 24 percent or 137,000 units at its Bupyeong plant in South Korea.
According to industry sources, the automaker recently provided its labor union a notice informing them of the plans. Reportedly, the reasons for the decrease is that the automaker will no longer use four-cylinder engines produced at the plant, as South Korea has become a less attractive manufacturing base due to high wages.
Bupeyong has been exporting 75,000 engines annually to GM Mexico. In March, the facility’s Propulsion Systems plant was in operation for 25 days, but will be operational for only five days a month starting in June — which is when the reduction in production is set to commence.
“GM Korea, which has the low production competitiveness due to high wages, is no longer attractive production base to management of the GM headquarters”, says Lee Hang-Koo, a senior research fellow at state-funded Korea Institute for Industrial Economics & Trade.” It should be remembered that GM can withdraw whenever it cannot find the market attractive as it did in Australia in the past.”
For its part, the Bupyeong plant appears to be looking for ways to reverse the trend by bidding to produce GM’s next-gen engines and other ways to increase output.
“Due to recent changes in the engine business environment at the Bupyeong plant, its production will temporarily drop, “ said an official from GM Korea. “However, we are planning to inject the next-generation engines and seeking various ways to increase the output.”