The on and off rumors have been around for years, but the news of a $469.9 million posted loss last year have fueled speculation GM will begin to slowly phase its Korean manufacturing base out. The automaker has also begun a voluntary early retirement program, its fifth since 2009. Those who started work as office workers before 2011 will be eligible for early retirement, but production workers are not.
Sources say GM Korea will now begin carrying out a major restructuring program as the country’s exports continue to dwindle. GM Korea was tasked with building small cars and other Chevrolets for Europe and Russia. GM pulled the brand from both markets years back, leaving Korea in a tough spot.
Exports decreased from 620,000 units to 410,000 last year.
Again, the Gunsan plant is said to be first on the chopping block when GM Korea initiates its scale back of operations. An unnamed industry insider painted a dreary picture for operations if an export market isn’t found soon.
“When GM Korea fails to find a solution for export soon, it will have no choice but to reduce production. With GM’s global sales strategy, GM has actually lost major export markets, including Southeast Asia, and has difficulties in securing its markets. In short, GM is preparing for the withdrawal from the Korean market through the phased production reduction.”