Following General Motors‘ decision to close its assembly plant in Gunsan, attention is now turning to GM’s remaining factories in South Korea.
South Korea’s finance minister has said the government will hold talks with GM over the future of its four plants after the company announced the closure of one and left the other three in the balance.
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“(The government) will come up with its own stance after we go over the company’s plan on normalisation, while continuing to have thorough discussions,” said finance minister Kim Dong-yeon.
Kim also said that related government agencies were having close talks over this issue.
Future product allocations for the plants are key. Barry Engle, president of GM International, urged GM Korea and stakeholders to show progress in ongoing discussions by the end of February, “as we are at a critical juncture of needing to make product allocation decisions,” according to Reuters.
Engle said GM’s new model assignment will impact the future of two factories in Korea.
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By GlobalDataThe Bupyeong facility consists of two factories – one that produces the Trax compact sport utility and Aveo subcompact, and the other that is responsible for the Malibu midsize sedan and Captiva SUV.
Despite stable operations, there are concerns over the possibility of GM shutting down the Bupyeong plant after two years, when the product lifecycle of the top-selling Trax expires, if GM does not assign new products, the Korea Herald reported.
Exports of Trax SUVs produced at Bupyeong plant stood at over 220,000 units last year, from 42,090 units in 2012, the company said.
To continue successful sales of the Trax compact sport utility vehicle, GM Korea has been working on the development of a second-generation Trax, code-named “9BUX,” expected for release between 2020 and 2021. However, reports say the next Trax has yet to be signed off for Korean production.
GM’s European exit took a toll on GM Korea’s exports and slashed operations at its Gunsan plant as capacity utilisation fell to just 20%.
GM’s strategic policy lately has been to end loss-making operations – such as in Europe and India – to shore up its bottom line, rather than work on making them profitable over a prolonged in future years.
GM Korea Company has said it will end production and close its Gunsan plant by the end of May 2018. Gunsan includes an engine unit with capacity for 200,000 and a 260,000-unit car assembly plant curently making Chevrolet Cruze/Cruze Classic/Cavalier models.
See also: General Motors axes a South Korean assembly plant
