South Korea is currently the world’s seventh-largest nation for exporting goods. It’s also where a fifth of all General Motors vehicles are built, and then exported globally. But the country has been somewhat of a trouble for The General thanks to the rising costs of manufacturing, various union-related issues, and the barking dog of a country just to the north. All that has culminated in what appears to be the final years of GM manufacturing in the region, according to Reuters.
Earlier reports of GM pulling Chevrolet Cruze production from the region was perhaps the biggest indication that the automaker is planning to minimize manufacturing operations there. Meanwhile, production of the Opel Mokka will be relocated from Korea to Spain. Still, the local labor unions aren’t buying it, and believe that GM is just bluffing, but some union leaders have tipped to Reuters on condition of anonymity that it’s quite possible that GM will shutter entire facilities in the country.
Comments
I don’t see GM completely leaving Korea for many reasons.
1) It isn’t easy to drop over 2 million in capacity, unless you go bankrupt like Daewoo did.
2) GM only sells about a 150,000 units there, but that is also profit it will lose.
3) GM Korea has some very good engineers there and are an integral part of the GM empire.
4) It would be extremely costly to close shop.
I imagine GM will trim some capacity and then move it to a cheaper environment; maybe, China, Thailand, Indonesia, or even Vietnam. It makes no sense to produce 2 million vehicles for a market of 150k with high labor costs in comparison to neighboring countries.
If this is true and not a bluff, than Holden could be in for some serious problems with their manufacturing…. 🙁
This guy gets it, what have we been saying for a while now! Holden might be next! The Korean thing is very interesting in that, they make cars that do just fine for that country but everybody gets upset knowing there car came from a Korean country! Now I also don’t thing GM will pull out 100% but I think they will build just enough cars to take care of the country and then move the rest of the production to other parts of the world where those cars are going to be sold!
As for Holden, I see a similar thing happening to them! They wont embrace any of the GM brands except Holden which doesn’t make GM happy. GM wants to see those Chevy numbers increase globally, so GM will force there hand! Start supporting Chevy, Buick, and Caddy in your country or we will lower production in your local down to what ever your country can handle and move the other that’s needed to another part of the world!
Hopefully this will get rid of the crap from daewoo that some middle eastern countries still have to deal with
This is not a big surprise as the Unions there have crippled man MFG’s there.
Also a major factor is the trouble with North Korea. Things there are much worse than the present administration wants to admit. To be honest not just them but many others really do not know what to expect from the north.
GM has a plan as they would not be doing this if they did not have a good place to move production to. It will be interesting to see who gets the work and the production.
“The trouble with North Korea” is that the USofA, after the failed attempt to take over all of Korea from the former, Japanese, colonial power, still has a very large contingent of armed forces in the South, and is practicing in annual military exercises the continuation of that war, which ended with an armistice 60 years ago. The first war which the USofA did not win.
Sure we could have killed many more or even started a full scale Nuke conflict that would have wiped out millions. But what good would that have been.
This is a case where they tried to wait out the ruling nut case family but in this case the crazy is generational.
The problem with North Korea is not with the regular people as many there are very kind. It is with the Military and the leaders who are starving their own people to death. Many live in fear there and the Chines government could do something about it if they chose but then they have been guilty of some of doing the same to many of their people too.
There are no simple easy answers with out getting many killed.
I’d like to see the encore and orlando production moved to north america.
Besides the workers, who do the actually production, there is the Korean Development Bank (KDB) which holds 17% of the GM Korea shares, and has, I undestand, a veto right about decisions of the majority shareholder GM Company.
In their chase for ever lower labor costs, the owners of the riches of this planet actually do increase the ranks of the industrial working class, which acts to strengthen our ranks, and helps to fight for higher wages and better living standards world wide.
No reason for despair.
Let us take those rumors as part of GM’s usual tactic of divide and rule, by putting up workers in one place against workers in another. They did that all the time in Europe, pushing for ever lower wages and worsening of working conditions for the mercy of letting them produce a car they would produce anyway.
I am not sure that “production of the Opel Mokka is designated to MOVE from Korea to Spain” [my emphasis]; I understood the announcement as the opening of an ADDITIONAL production location in and for Europe, because the Korean factories could not satisfy the worldwide demand for the Mokka/Encore.
GM should also move production of the Spark EV to the U.S., since the electric motor train (battery, motor, and electronics) are built here, shipped to South Korea, assembled to the Spark body, then shipped back to the U.S. for sale. GM should do the opposite by shipping “gliders” (Spark bodies and interiors) to the U.S. where the electric motor train is assembled, then the completed vehicle is sold locally. If there is any issues in South Korea, GM can get Spark gliders from another plant elsewhere and continue to finish the electric vehicles as before.
Last time I checked South Korea was a free democratic country thanks to the U.S., apparently some people think we lost that war??? Not the South Koreans! The South Korean government will pay to fly U.S. veterans and their family members to visit the country they liberated, and school children commonly place flowers on the graves of U.S. soldiers to teach them the history of their nation and understand the debt of gratitude owed to those soldiers. Steps off soapbox….sorry I usually like to keep comments GM related.
No need be sorry when you speak the truth.
Gm is bluffing. They need to down-size, have too many global design studios; however, S Korea has a free trade pact with the US and EU which is needed until the US-EU pack is reached.
Korea makes great cars, GM has made great use of its studio–Encore and Velarno–but focus is shifting to China and back to Europe.
If the General is betting on China… The General is making a huge mistake.
China went nuts when we deployed 2000 Marine trip wires in Australia. With the recent belligerence to Japan, Vietnam, and the Philippines… Any investment in China is a very risky bet.
Australia, and the other Pacific nations can see what is coming. It’s too bad multinational corporations are blind and cannot. Any idiot knows that an industrial country can manufacture much more than just autos. The biggest transfer of wealth, and knowledge in history, will be the very rope that hangs the sellers who sold everything to the lowest bidders.
While I agree to not trust China it is a market all auto makers have to be in or risk the possibility of being left behind.
Here is the issue. China has at least 51 percent of the control of every automaker by making them all partner with the Chinese automakers. You do not sell a model in China unless you share technology and give control to your Chinese partner. This sucks. GM is reluctant to sell the Volt in China because they do not want to share the technology.
Here is the catch. If an automaker is not involved in the China market they are left out of the largest and fastest growing market in the world. If they do not have a slice of this market the other automakers will only gain in more profits and market share. Even if they get cut out today the money they have taken in has strengthened each and every company there. Lets face it China has propped up GM for a good while now while they were losing money in Europe and even in the States.
China is a risk but the more GM makes the more the less likely they will lose even if they get shut out.
The Ace that GM and other foreign brands hold on China is their own people hate Chinese cars. The top ten selling cars in China are not Chinese. I am not sure as of now but I do not think they even had one in the top 15 last year.
The Chinese have had issues with the auto market as they are struggling with quality and styling. Also the fact that many people have a image of everything from China is cheap or poor quality. While this is not true the issue for the Chinese is they lack vision and originality in their products. They can MFG and copy as well as anyone. Let face it most of our TV’s and all the Galaxy and I phones are made in China and they are world class. But where were they designed. Here and Japan.
China has to rob, steal and copy nearly everything as so many of their people have been so isolated they have no idea of where the world is. They are now sending people out to learn and comeback and create so this too will change but will they be too late to take advantage.
WWIII has already started and it is a global economic war. Everyone is working for a slice of the pie and It will be interesting to see how it is played out. The only real issue is we are tied economically and all of us lose if one of us fails. The wild cards are the counties in turmoil in the middle east and countries like Korea that are isolated. These folks have nothing to lose and can take down the system if we, Europe or China slips up. Why is Germany helping bail out some in the Euro market. Because they have too along with help from the others.
The real issue at hand is many of the rouge countries have learned how to influence Capitalism. America no longer has a lock on Capitalism and we will once again learn how to work to keep the system going and no more auto pilot.
Excellent comment Scott.
As you imply, there is no easy answer. Ironically, the very device that we have given the world may be the weakest link in our defense… The micro chip.
The world is shrinking, but the population of China is not.
It is probably not as easy as I suggest, but why not build cars in the markets that sell the most models. This would reduce imports, cut additional costs, ensure demand is met, whilst the local manufacturing pride could also ensure additional sales.