The ever-shrinking General Motors returns for 2018. The automaker announced it will cease production at the GM Gunsan plant in South Korea, which produces the Chevy Cruze and Orlando, by May 2018. The move marks the first major step in GM’s restructuring efforts in the country, where it has underperformed for years.
GM Korea CEO said the following in a company statement:
This is a necessary but difficult first step in our efforts to restructure our operations in South Korea. We recognize the contribution and support of our employees, the wider Gunsan and Jeonbuk communities and government leaders, particularly through the most recent difficult period. We are committed to supporting all of our affected employees through this transition.
The announcement comes a week after GM CFO Chuck Stevens and CEO Mary Barra went on the record about needing to restructure the automaker’s operations in the country. GM Korea has remained a blemish on GM’s financial performance for years as exports dropped. 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.
In announcing plans to shutter the Gunsan plant, GM iterated that it has a concrete plan in place to remain in South Korea and it did not mention plans of a full exit from the market.
GM has moved swiftly to cut off money-losing operations in the past few years. It has axed Holden Australian production, Indian retail sales and one plant, Indonesian manufacturing and its entire European business in an effort to become leaner.
GM will share its proposal with key stakeholders, including the labor unions and the South Korean government, in ongoing discussions. The proposal includes new product allocations and investments for the remaining Korean plants.