Photo: Chevrolet
Groupe PSA and former General Motors division Opel are on the offensive, doubling down on exports and the North American market. On the other hand, General Motors is finding it hard to make a case for the Gunsan facility in South Korea, which will be closed down in May 2018.
One of four plants the American juggernaut operates in South Korea, Gunsan is the place where the Chevrolet Cruze and Chevrolet Orlando are made. The problem is, some 2,000 people are working there despite the fact the factory has been running at 20 percent of production capacity over the past three years. Whichever way you look at the data, you don’t need to be an economist to figure out that GM Korea is bleeding lots of money.
Shutting Gunsan down will cost General Motors an estimated $850 million at current exchange rates. More to the point, the automaker is expecting to pay $375 million in employee-related expenses and $475 million in non-cash asset impairments. These charges will be laid out by the bean counters in the financial results for the second quarter of 2018.
“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,” said Kaher Kazem, head honcho of GM Korea. “We are committed to supporting all of our affected employees through this transition."
Underperforming businesses has been and still is a sensitive subject for General Motors, more so when you consider that key stakeholders expect as much profit as possible, not losses. According to executive vice president of GM and president of GM International, the automaker will decide on a plan to turn around GM Korea by the end of February 2018.
General Motors is present in the South Korea since its establishment in 2002. Over the past 16 years, the Icheon-based division manufactured 10 million vehicles, with GM Korea supporting approximately 200,000 direct and indirect jobs. In terms of sales, the year 2017 saw GM Korea move 132,377 vehicles in its domestic market, plus 392,170 vehicles that went to export in 120 markets around the world.
Shutting Gunsan down will cost General Motors an estimated $850 million at current exchange rates. More to the point, the automaker is expecting to pay $375 million in employee-related expenses and $475 million in non-cash asset impairments. These charges will be laid out by the bean counters in the financial results for the second quarter of 2018.
“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,” said Kaher Kazem, head honcho of GM Korea. “We are committed to supporting all of our affected employees through this transition."
Underperforming businesses has been and still is a sensitive subject for General Motors, more so when you consider that key stakeholders expect as much profit as possible, not losses. According to executive vice president of GM and president of GM International, the automaker will decide on a plan to turn around GM Korea by the end of February 2018.
General Motors is present in the South Korea since its establishment in 2002. Over the past 16 years, the Icheon-based division manufactured 10 million vehicles, with GM Korea supporting approximately 200,000 direct and indirect jobs. In terms of sales, the year 2017 saw GM Korea move 132,377 vehicles in its domestic market, plus 392,170 vehicles that went to export in 120 markets around the world.
Google News