GM to shut down S.Korean plant

GM to shut down S.Korean plant

"That is a really significant statement".

Union members on Wednesday agreed to demand the cancellation of the closure and operations to be resumed, calling for the chief of GM Korea to resign.

Given Barra's bold moves to streamline GM operations globally, including selling Opel in 2017 and withdrawing from the Russian market, it initially looked as though the company was preparing to call it a day in Korea.

It's not immediately clear what those "next steps" may be, but it seems obvious that GM is leaving everything on the table-including a complete exit from South Korea.

The company is in talks with union officials, government and GM Korea shareholders about the cost cuts needed to keep other plants in the country operating.

"We have a very solid track record", said GM President Dan Ammann in a statement.

"If we are successful in working with our stakeholders to restructure and get to a viable cost structure, we would see an opportunity to invest" in new vehicles, Ammann said.

Adding to GM's ammo, the automaker can point to other moves it has made since CEO Mary Barra came onboard four years ago. GM has also exited manufacturing in Australia, South Africa and Russian Federation. Just as Trump has done in the United States, Moon has pledged to create more jobs and provide job security as his top economic policy.

GM slipped 0.2 percent to $41.93 as of 9:35 a.m. Tuesday in NY.

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South Korea's government-run development bank owns a 17 percent stake in GM Korea.

GM Korea hires around 16,000 workers around the country, including at its Gunsan plant. That's changed in recent years as labor costs there have increase and investments next door in China chipped away at the South Korean business's competitiveness, according to reports.

The firm's key officials state that the shutdown of the unit is a part of its business restructuring plan in Asia.

In 2016, GM's operations across Asian countries had suffered huge setbacks except in China.

GM Korea accounted for 7.4 percent of total vehicle production as of a year ago.

GM Korea recorded some $1.8 billion in net losses between 2014 and 2016, and is expected to have seen an estimated $556 million in losses past year.

GM saw the acquisition as an opportunity to produce both for the booming Korean domestic market while also exporting vehicles to the USA and other markets with high labor costs.

That won't be cheap: Gunsan now employs about 2,000 workers, and GM expects to take a one-time charge of "up to $375 million" in employee-related expense. It's been running at just 20 percent of capacity, and about a third of the 34,000 cars built there past year were exported.

At the end of 2016, GM Korea had 7.53 trillion won of assets, 7.521 trillion won in liabilities, and a debt-to-equity ratio of 867 percent. The Detroit automaker owns 77 percent of the operations while GM's main Chinese partner, SAIC Motor Corp Ltd 600104.SS , controls 6.0 percent.

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