Civic activists and car industry experts meeting in Seoul at the weekend were agreed on one thing: General Motors is looking increasingly unlikely to buy Daewoo so the government needs to ready Plan B – nationalisation.
According to the Korea Herald, everyone at a “Daewoo Motor crisis” seminar sponsored by the People’s Solidarity for Participatory Democracy (PSPD) agreed that GM will pull out of its Daewoo bid, due to uncertainties over Asian economies and Daewoo Motor itself.
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The paper said that seminar participants saw only one option for the Korean government if GM says no: nationalise the terminally ailing automaker. They added that there would be even more lay-offs and cost cutting under nationalisation to persuade taxpayers to agree to the injection of more public funds.
Chung Seung-il, a fellow of the Korea Automobile Industry Research Institute, told the seminar that GM, struggling with falling sales in a faltering U.S. economy, may eventually decide not to buy Daewoo for fear its stock value might plunge, the Korea Herald reported.
“In order to overcome slumping car sales, GM is in the midst of pushing for layoffs, production cuts and other downsizing,” said Chung. “In addition to the possible impact on stock value, GM is concerned about dwindling cash reserves, credit rating downgrades, uncertainties over Asian economies and the unclear outlook for Daewoo Motor.”
The paper added that, given the complicated circumstances, the top GM management would likely be reluctant to risk their own careers by pursuing the Daewoo purchase.
Daewoo Motor official Kim Dae-ho said that independent survival was not an option, without the government’s debt guarantees and creditors’ debt-for-equity swaps.
The Korea Herald also noted that the ongoing Daewoo-GM situation led to “a classic good cop, bad cop scenario” on Tuesday at a press conference held by the American Chamber of Commerce in Korea (AmCham).
According to the paper, AmCham official Jeffrey Jones commented that he hoped that GM would “take Daewoo off the hands of Korean taxpayers.” He later clarified his remarks, saying he did not necessary mean that GM should get Daewoo for nothing.
But James Rooney, an AmCham board member, said that nothing was too high a price to pay for the troubled automaker, which currently draws $US200 million a month in government support.
“Korea will likely have to pay someone to take out its garbage,” the Korea Herald quoted Rooney as saying.
General Motors Strategic Review IMS Corporate Profile – Daewoo |
