General Motors reportedly shocked and surprised South Korean officials with the announcement of its intentions to shutter the Gunsan plant by May 2018. Following preliminary discussions, representatives walked away confident both the country and automaker were on the same page.
“GM only talked about the difficult situation they were in, and asked for our help, but did not say a word about the closure before. It was a shock to us,” a South Korean government official said.
According to the report, GM notified the South Korean government about the plant closure on Monday and said the plan had already been approved by the automaker’s board of directors. Now, officials who spoke anonymously said there’s a deep mistrust of GM after what they categorized as a blindside.
Many locals also lamented the timing of the announcement, which comes as South Korean celebrate Friday’s Lunar New Year holiday. Many workers receive bonuses and gifts to mark the holiday; 2,000 Gunsan workers learned their job would go away, and another 14,000 GM Korea workers were offered redundancy packages.
GM stated in its announcement that it has a plan to remain in South Korea, but it will likely require co-investment from South Korea. Now, the pressure rests on the government.
Hong Young-pyo, a ruling party lawmaker from Bupyeong, said there’s a 50/50 chance GM remains in the country. The automaker said ti will decide the fate of the rest of its operations in the weeks to come.
GM Korea has dwindled in importance as rising wages and low productivity sapped profits. Last year, sales dropped 26.6 percent, and the unit began 2018 with a 34 percent decrease in sales year-over-year. Exports, which are the primary GM Korea profit generator, were down 6 percent in 2017. GM no longer does business in many markets where GM Korea once built vehicles for.