GM will shut a South Korean plant, more cuts could follow


"We recognize the contribution and support of our employees, the wider Gunsan and Jeonbuk communities and government leaders, particularly through the most recent hard period", Kaher Kazem, GM Korea President and Chief Executive said in a statement, adding that the company is committed to helping all of its affected workers through this transition.

"Time is short and everyone must move with urgency", GM President Dan Ammann told Reuters.

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

GM slipped 0.2 percent to $41.93 as of 9:35 a.m. Tuesday in NY.

"We have a very bad trade deal with Korea", Trump said during a meeting with a bipartisan group of lawmakers to discuss steel and aluminium imports.

GM expects to take up to $850 million in financial charges, including approximately $475 million of non-cash asset impairments and up to $375 million of primarily employee-related cash expenses.

GM says the plant will close by May 2018, but is working with "key stakeholders" - including the labor union and the South Korean government - to develop a plan to turn the South Korean business around.

GM Korea hires around 16,000 workers around the country, including at its Gunsan plant.

The company started closing down operations in unprofitable regions including Europe, Australia, South Africa and Russian Federation, since 2015.

South Korea's government expressed "deep regret" over the factory's closure.

South Korean officials will hold talks with GM about ways to keep the carmaker's operations open, the finance ministry said in a statement Tuesday. That's changed in recent years as labor costs there have increase and investments next door in China chipped away at the South Korean business's competitiveness, according to reports.

The plant shutdown is part of its broader Asia business restructuring. Barra's focus has been to maximize GM's return on invested capital, and she stressed that Korea was a serious problem area when she spoke with Wall Street analysts about the company's strong Q4 and full-year 2017 results. Excluding profits from China, GM said its Asian operations lost money in 2016.

GM partakes a 77 percent stake in GM Korea and the state-run Korea Development Bank (KDB) holds a 17 percent stake in the maker of the Chevrolet Spark minicar, the Cruze compact, and the Captiva SUV.

GM saw the acquisition as an opportunity to produce both for the booming Korean domestic market while also exporting vehicles to the USA and other markets with high labor costs.

The U.S. company planned to restructure some 2,000 employees, including irregular workers, without elaborating on it.

GM isn't ready to give up on Korea, however. But it's been running at about 20 percent of its total capacity for the last three years, "making continued operations unsustainable", according to the automaker.