GM Closes Korean Plant Amid Overseas Troubles; Chevrolet Orlando Dies With It

Steph Willems
by Steph Willems
gm closes korean plant amid overseas troubles chevrolet orlando dies with it

General Motors has announced plans to close one of its four South Korean assembly plants in an effort to stem a tsunami of red ink.

As it attempts to stabilize (or cut) unprofitable overseas operations — an effort that led to the sale of its European Opel and Vauxhall brands last year — GM will close its Gunsan, South Korea plant by the end of May. That facility, which employs 2,000 workers, builds the Chevrolet Cruze sedan and Orlando MPV, a boxy, three-row vehicle that almost made it to American soil.

“The Gunsan facility has been increasingly underutilized, running at about 20 percent of capacity over the past three years, making continued operations unsustainable,” the company wrote in a statement late Monday.

GM, which gained a major manufacturing presence in the country after buying up the remains of bankrupt Daewoo in the early 2000s, wants to stick around. The automaker has floated a plan to its Korean labor union and the country’s government (which owns a non-controlling stake in the company) outlying a strategy to reverse falling sales and turn a profit. Part of the plan includes cutting dead weight, like Gunsan, while investing in new product.

“The performance of our operations in South Korea needs to be urgently addressed by GM Korea and its key stakeholders,” said Barry Engle, GM executive vice president and president of GM International. “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.”

It’s possible that more cuts will follow. GM Korea, which sold 132,377 vehicles in the country last year and exports three times that number to other nations, employs about 16,000 workers. Sales fell 27 percent in 2017. Many of the company’s exports fill out the bottom rungs of GM’s North America’s product ladder, with the Chevrolet Spark, Sonic, Trax, and Buick Encore all hailing from Korean plants. Some of the product sent to overseas nations arrives in knock-down kit form, bound for local assembly plants.

“As a result of [the plant closure], GM expects to take charges of up to $850 million, including approximately $475 million of non-cash asset impairments and up to $375 million of primarily employee-related cash expenses,” the company stated.

The Chevrolet Orlando, appearing for the 2011 model year, rides atop the Cruze platform and utilizes a number of engines, depending on market. From 2012 to 2014, GM Canada sold the model with a single powertrain: a direct-injection 2.4-liter four-cylinder and six-speed automatic. GM Uzbekistan announced the discontinuation of the vehicle in late January.

GM Korea also operates a Vietnamese plant in Hanoi, a relic of a joint venture started up in the Daewoo era. In that country, GM vehicles recently saw price cuts.

[Image: General Motors]

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  • Onus Onus on Feb 13, 2018

    Interesting that you mentioned GM Uzbekistan. That is a weird part of GM. They still make the first generation Daewoo Lacetti. They sell the Lacetti under the Ravon brand after GM left the russian market. Not sure how they sell it in Uzbekistan since it appears they haven't left that market as they did with Russia.

    • See 1 previous
    • Onus Onus on Feb 14, 2018

      @Peter Gazis Peter, I am aware they still sell a few. Mostly the "fancy" models and not the plebeian stuff they used to sell as well. The Cruze and the Aveo (sonic) was super popular in Russia. You used to see them everywhere. My Uncle-in-law in fact was a Aveo owner himself though he has since sold it. Not sure what he is driving these days. Still not sure why they couldn't make it work. I was really looking forward to the new Niva concept. Ah well for what its worth the Russian economy is growing again. Hopefully it will get back on track. Its been a rough couple years for car sales.

  • TDIGuy TDIGuy on Feb 14, 2018

    Huh. Another car sold in Canada you can't buy in the US. Never knew that. The Orlando... One of the reasons the Toronto Star dropped Jeremy Clarkson's review column.

  • JLGOLDEN In order for this total newcomer to grab and hold attention in the US market, the products MUST be an exceptional value. Not many people will pay name-brand money for the pretty mystery. I can appreciate the ambition of selling $50K+ crossovers, but I think they will go farther with their $30K-$40K offerings.
  • Dukeisduke They're where Tesla was when it started - a complete unknown. I haven't heard anything about a dealer network. How are they going to sell these? Direct like Tesla? Franchises picked up by existing new car dealers?
  • Master Baiter As I approach retirement, and watch my IRA and 401K account balances dwindle, I have less and less interest in $150K vehicles.
  • Azfelix With a name that sounds like a bad Google translation, problems appear to permeate every aspect of the company. I suggest a more aggressive advertising campaign during The Super Terrific Happy Hour show to turn things around.
  • Buickman GoneFast.