General Motors Co (GM) yesterday said it would close an underutilized factory in Gunsan, South Korea, by the end of May as part of a restructuring of its operations.
The move is a setback for South Korean President Moon Jae-in’s administration, who has made jobs and wages a priority.
A GM statement on Monday said that the company has proposed to its labor union and other stakeholders a plan involving further investments in South Korea that would help save jobs.
“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,” said Barry Engle, GM executive vice president and president of GM International.
Company chief executive officer Mary Barra has said GM urgently needs better cost performance from its operations in South Korea, where auto sales have slowed.
South Korea’s government expressed “deep regret” over the factory’s closure.
It said it plans to study the situation at the business and would continue talks with GM.
The South Korean Ministry of Finance said earlier this month that GM had sought government help.
The government has denied reports that South Korea would raise the issue in trade talks with the US.
The factory in Gunsan, a port city about 200km southwest of Seoul, has been making the Cruze, a sedan, and the Orlando model SUV. It employs about 2,000 workers and only used about 20 percent of its full production capacity last year, rolling out 33,982 vehicles.
GM Korea has made 10 million vehicles since it was set up in 2002. Last year, it sold 132,377 units in South Korea and exported 392,170 vehicles to 120 markets around the world.
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