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.
Comments
Makes the Korean auto union strike before look really stupid. Hope it was worth it.
GM is retreating from all world markets. They don’t have the management, design, or production talent to compete against first tier companies. If it were not for Chevrolet pick-up trucks, there would be little reason to keep the lights on.
While I agree with you, I’m sure if you ran a business you’d want to do business with countries that are business friendly. South Korea has become unfriendly to business with entitled employees who think they have a right to a job.
“South Korea has become unfriendly to business with entitled employees who think they have a right to a job.”
Because the US doesn’t have any such ‘entitled employees’?
Nevertheless, you’re going to write off ALL of South Korea because of one union?
I am against all unions, no matter what country they are in.
The American middle class worker and consumer was built on so called “entitled wage”.
Low paid Chinese can make cars. Who needs buyers?
Cut and run only lifts stock price once. Fixing the region leads to long-term profit.
Wall Street grins as Barra hollows out Old GM on a gamble of Cruise Automation and Maven which may thrive or, being first to market, fail due to mistakes Toyota will better learn from and VW will master.
I still think GM need Opel for the next generation of true global architectureal kits. Korean studios have been good for GM, too.
If GM plans to become a regional player, the America’s and China, it will in the long-term bleed like Ford. GM needs massive India and number three market Europe.
20% Capacity Utilization following the exit of Chevy in Europe, sale of Opel/Vauxhall in Europe. To anyone in the know this shutdown of capacity in Korea isn’t a surprise at all, it was obvious 2 years ago that this would happen once the more urgent and expensive steps in Europe had been taken. GMIO, soon to be renamed, will be profitable within 18 months and that’s what counts. You can’t ever hope to break even with 20% capacity utilisation.
If the plant has been a blemish for GM for years then it’s time to close the plant . The exports are down and GM is doing the right thing . They aren’t leaving the market just closing a facility that isn’t being fully utilized .
They probably should have closed it post bankruptcy .
As the old adage goes.. it could have been worst as General Motors has 4 facilities in South Korea and will be closing the Gunsan plant; General Motors could have decided to closed more and while no one wants to lose their job, the people need to understand that this is the logical thing to do if GM Korea is to survive.
They are going to close the remaining plants as well.
Sales plunged off a cliff in South Korea when GM quit Europe. Cutting their way to growth !