South Korean President Miffed Over GM Plant Closure, Fearful of the Future
South Korean President Moon Jae-in says General Motors’ decision to shut down its Gunsan plant will negatively impact the region. He’s hoping his administration can work some impressive mojo to boost economic activity in the area, but admitted that GM’s quick exodus could make that tricky. There are also concerns that the automaker may soon decide to close down its remaining three plants within the country, leaving 16,000 South Koreans without employment.
“Especially, the decline in employment [at GM] and subcontractors will be difficult to bear for Gunsan City and North Jeolla province,” Moon said in a statement released by his office.
However, things haven’t been going well for GM in the region. The company said it shuttered the plant after it became increasingly underutilized — running at about 20 percent of its total capacity over the last three years. Meanwhile, GM President Dan Ammann claims Korean labor costs have increased by over than 50 percent since 2010. Worker productivity is also abysmal. It takes roughly three hours longer to build a single car in GM’s Korean facilities than it does in the U.S., and Korean strikes are becoming commonplace.
General Motors doesn’t want to outright abandon South Korea, but shrinking sales haven’t helped. Likewise, a lot of the product produced within the country hasn’t fared well as exports. Ultimately, the reduced profitability is what forced the decision to close the plant and may cause further cutbacks within the region.
According to Reuters, a GM Korea spokesman said Monday that the company is committed to supporting the affected workers. The U.S. automaker launched a voluntary redundancy program last week for its employees in that country. Meanwhile, workers at the Gunsan factory called the shutdown a “death sentence” and threatened to strike — not that it would make one bit of difference.
Moon requested that his government be uncompromising in its ongoing trade talks with the United States, voicing serious concerns over curbs on imports recently imposed by the nation. “Due to the expansion of U.S. import curbs on our export products like steel, electronics, solar panels and washing machines, I worry about our exports as a whole despite our international competitiveness,” Moon said. “I ask the government to act firmly and sternly to unreasonable protectionist measures, such as by lodging complaints to the World Trade Organisation and checking for violations of the U.S.-South Korea free-trade agreement.”
General Motors is expected to make a decision on its remaining factories in South Korea in the coming weeks. Whether or not it decides to close them, it has confirmed that extensive restructuring will have to take place if it is to remain in the country.
[Image: General Motors]
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