By on January 27, 2014


Reuters is reporting from “a source with direct knowledge of the matter” that General Motors plans to reduce shifts at its South Korean factories by half as it aligns its global manufacturing. The move could eliminate 1,100 jobs. GM had announced last month that it was discontinuing the Chevrolet brand in Europe by the end of next year and GM Korea produces many of the Chevy branded cars sold on the continent.

According to the report, GM Korea has already approached the union representing its production workers about reducing the current two shifts at the Gunsan factory to a single shift. That plant employs 2,200 manufacturing employees. It’s not clear if the surplus employees will be laid off, offered voluntary retirement or relocated to other facilities.

A GM Korea spokesperson declined to comment in detail, but confirmed that talks are under way about the Gunsan facility. That factory, one of four GM Korea assembly plants, currently produces the Chevy Cruze compact sedan and Orlando SUV. It has an annual production capacity of 260,000 units.

“The Chevy pullout would have a direct blow to the Gunsan factory. GM expects its production in Gunsan to shrink to 100,000 this year and 120,000 next year… The union wants to maintain two shifts, and instead cut the number of cars produced per hour,” the source said.

Mounting costs and labor unrest has caused GM to reconsider its reliance on South Korea for 20% of its global production.

While GM Korea’s operations will be used to supply the Australian market following the planned 2017 closure of GM’s Holden subsidiary’s assembly plants, analysts say that volume would not be enough to offset the production losses caused by pulling the Chevy brand out of Europe.

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18 Comments on “GM May Slash 1,100 Korean Jobs As Chevy Pulls Out Of Europe...”

  • avatar
    doctor olds

    GM likes Korean engineers. Maybe not Korean labor unions so much. Either that, or they are bargaining with the union with this.

    If memory serves, they didn’t want to buy much of the production capacity there when they made the Daewoo deal, as militant unionism was cited as one of the biggest downsides.

  • avatar
    schmitt trigger

    There was a recent thread on how Toyota has solidified its global #1 position, whereas VW and GM were in a tight race for the #2 and #3 spots.
    My guess is that moves like this will make sure that GM moves to #3.

    • 0 avatar

      Toyota’s global growth rate is around 2% – GM’s global growth rate is over 4%.

      Toyota has volume problems in China in particular which is well documented here on TTAC (dispute over rocks in the ocean and anger over WWII atrocities that still linger). In addition, the Japanese auto market is stagnating.

      2% growth versus 4% growth may not seem to make a big difference but when you’re talking the scale of 9.75 to 10.0 million, it is a huge difference.

      Yes, pure extrapolation at this point:

      2014 – Toyota 9.98 in 2013 X 1.02 = 10.20 million

      2014 – GM 9.74 in 2013 X 1.04 = 10.13 million

      The difference is, on paper, at 2013 growth rates, just 70K cars. That gap could be widened or closed with some clever cash on the hood over 30 to 60 days in North America alone.

      VW is enjoying solid global growth (they won’t announce numbers for another month or two) but are in full speed reverse in North America.

      2014 is going to be interesting.

      • 0 avatar

        Math isn’t your thing either.

        • 0 avatar

          What part. from Left Lane News, January 23, 2014:

          Toyota nearly became the first automaker to crest the 10 million unit mark in a single year, but fell just short of that milestone with 9.98 million worldwide deliveries…However, GM’s sales growth of 4 percent outpaced Toyota’s 2 percent improvement…

          Read more:

          I did get GM’s annual number off – it was 9,710,000 – not 9,740,000

          2014 – Toyota 9.98 in 2013 X 1.02 = 10.20 million

          2014 – GM 9.71 in 2013 X 1.04 = 10.09 million

          110K difference.

          You’re point???

          • 0 avatar

            His point? None whatsoever. He’s just sore you called him out, very well done BTW, on his, let’s just say not-very-inspired, Nazi comment the other day.

          • 0 avatar

            I thought he would say something about how the Honda Fit outperformed that Daewoo crap in the recent IIHS subcompact test. Oh wait, I might have the results mixed up!
            It must be a Government conspiracy, but what do you expect when we live in Nazi Germany!

          • 0 avatar

            You went back and edited your earlier post to reflect that the difference between 10.2 million and 10.13 million is 70,000 instead of 7,000 and then pretended you didn’t. You’re as classy as your cheerleaders.

          • 0 avatar

            WOO HOO! I have cheerleaders! You like me! You really, really like me!

      • 0 avatar
        doctor olds

        the correct arithmetic, using your assumptions:
        9.98M X 1.02= 10.1796M
        9.74M X 1.04= 10.1296M
        For a difference of 50,000 units
        I see you corrected the assumption of the GM number, and the arithmetic.

  • avatar

    “… The union wants to maintain two shifts, and instead cut the number of cars produced per hour,” the source said.”

    Did someone seriously say this with a straight face?

    Am I missing something or am I missing something?

  • avatar

    “as Chevy pulls out of Europe.”

    – A frustrated Europe could not be reached for comment.

    (channeling Chevy Chase circa 1976)

  • avatar
    SCE to AUX

    The 1100 union members poised to lose their jobs should ask themselves how the union helped them. One month of lost work exceeds most annual pay raises.

  • avatar

    “Mounting costs and labor unrest has caused GM to reconsider its reliance on South Korea for 20% of its global production.”

    The change in attitude toward Opel and the North Korean political situation also seem to be factors.

    Akerson seems to have been genuinely rattled by the April 2013 nuclear threats, and GM’s strategy notably shifted following that political crisis, including his announcement of contingency plans being made in the event that the Koreans went to war.

    • 0 avatar

      Akerson know something we do not?

      • 0 avatar

        I would presume that he just sees too much downside risk in having the North Koreans within close proximity of a substantial part of GM’s production business, particularly for cars that are intended for export.

        The unions are a PITA, the currency is bound to strengthen over the long term, and the Europeans are turning up their noses at GM cars with bowties. Meanwhile, Opel is now central to the US Buick effort.

        Combine that with the inconvenience of nuclear annihilation, and that means shifting the focus back to Opel and away from Korea. If GM wants to add production in Asia, then it can do it somewhere else in the region.

      • 0 avatar
        doctor olds

        “Akerson know something we do not?” – Of course! He knows lots of somethings “we” do not!!

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