"Unsustainable" operations means one factory's already shuttered.
Embattled American auto conglomerate GM is clearly not shying away from making the tough decisions it needs to to remain in business. After having ended Australian manufacturing last October and then selling Opel and Vauxhall to French concern PSA Groupe, the company is now taking the axe to other cost-heavy quarters of the company, like their Korean operations.
Already, one plant has gotten the axe. Gunsan, a prefecture about 2 1/2 hrs train ride out of Seoul, has already lost its GM plant after the company began to ‘urgently address’ its businesses in South Korea. The Gunsan plant in particular is said to have only been operating at 20% capacity, so it’s clear to anyone with a calculator and a rudimentary understanding of how to business that that wasn’t exactly great news for GM’s profit margins.
“The performance of our operations in South Korea needs to be urgently addressed by GM Korea and its key stakeholders. As we are at a critical juncture of needing to make product allocation decisions, the ongoing discussions must demonstrate significant progress by the end of February, when GM will make important decisions on next steps.” — Barry Eagle, President, General Motors International
Eagle’s comments have made it clear that while Gunsan may have been the first to go, it may not be the last. The Gunsan plant was the facility that’s been making the Holden Astra Sedan for us since it launched, offered in the market their as the Chevrolet Cruze. However, comments made by Holden senior comms manager Mark Flintoff to GoAuto say our concerns are, for now, a tad premature:
“We have a good level of inventory to meet customer demand for the time being. GM is working with key stakeholders on future plans.” — Mark Flintoff, Senior Manager for Communications (Product & Brand), GM Holden Ltd.
It’s not just the Astra Sedan that faces an uncertain future. The Barina hatchback, and Trax compact SUV are built in another Korean factory, in Incheon. The Spark on the other hand, is built in Chanwon.
In a statement, GM has underlined its commitment to its Korean operations, and aims to work closely with players involved to restructure its business in the country and get it to a more sustainable level.
“The company has proposed to its key stakeholders, including its labour union, the South Korean government, and key GM Korea shareholders, a concrete plan to stay in the country and turn the business around that requires full support of all parties. The proposal includes significant product-related investments in South Korea, and would preserve thousands of jobs.” — Statement by General Motors
So it’s clear to us that GM isn’t looking for a short-term solution, but genuinely aims to find a way to maintain its Korean operations in a way that’s beneficial for all, especially one that would cost thousands of its employees there their livelihoods. However, should a solution not be found in time, it’s possible that GM may simply move the production of the Astra Sedan, Barina, Trax and Spark to its facilities in Mexico or China. But time will tell.