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GM Questioning Future of South Korean Operations

GM Questioning Future of South Korean Operations

General Motors is closely scrutinizing its South Korean operations, to the point of closing one of its assembly plants in the country. The plant closure is just the first step of several courses of action GM is exploring in an attempt to turn a profit in its Korean operations.

Over the last three years, the automaker has wasted little time shedding itself of unprofitable markets. Most recently the company exited the European market by selling off its Opel division. GM has also exited manufacturing in Australia, South Africa and Russia.

For now GM has just confirmed plans to shutter its assembly plant in Gunsan, which employs about 2,000 people. Last year the plant produced only 33,982 vehicles; a mere 20 percent of its actual production capacity. GM has three other assembly plants in South Korea, with a majority of the production capacity allocated for exports.

Along with confirming the closure, GM President Dan Ammann confirmed the company is considering further action as it negotiates with labor unions and the Korean government regarding cost cutting at its other three plants. Ammann went so far as to elude that a failure to secure cost cuts in the country could put the rest of its operations in jeopardy.

South Korea’s state-run development bank owns a 17 percent stake in GM Korea. GM controls 77 percent of its Korea operations, while Chinese partner SAIC owns a 6 percent stake.

GM’s willingness to shed unprofitable operations stems from a self-imposed mission to focus on returns and capital discipline to aid in funding new technologies. A decision regarding the future of GM Korea is expected within the week.





 

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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 Latest Forum Messages
  1. vanshmack
    At some point, cutting your way to increased profits will always result in...fewer profits.
    arutherford
    RMNA makes Samsung work by having them build some Rogues for North America.

    Why can't GM figure it out....
    Andrew_L
    Tone
    On one hand, I think it's great that GM is willing to divest itself of unprofitable ventures. On the other hand, it's slightly concerning how many ventures prove unprofitable for GM.


    I guess they see no way of correcting the ship and would rather just abandon those markets
    2b2
    ^

    Tone
    On one hand, I think it's great that GM is willing to divest itself of unprofitable ventures. On the other hand, it's slightly concerning how many ventures prove unprofitable for GM.
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