The surprise decision taken by U.S. automaker General Motors Co. (GM) to shut down one of the four manufacturing plants operated by its South Korean operation GM Korea Co. in Gunsan, southwest of Seoul, is drawing strong condemnation from both regional and central governments with a warning to boycott GM vehicles.
“(The decision to close the Gunsan plant) is a brutal act that would place the factory workers and 300,000 Gunsan residents in despair,” the Gunsan city government said in a statement on Tuesday. Instead of the shutdown, the regional government urged the Detroit-based auto giant to promptly seek a suitable buyer for the Gunsan manufacturing facility of GM Korea who can guarantee succession of its workers, saying that the livelihoods of about 13,000 workers and sub-contract workers are at stake due to the decision. It even warned that it may consider boycotting GM vehicles if the carmaker fails to take appropriate actions.
GM earlier Tuesday announced that it has decided to close the Gunsan plant of GM Korea by May and demanded all key stakeholders to urgently cooperate the company to turn around its ailing Korean operations. GM is seeking additional fund and incentives from the Korean government to revive its Korean operations, but it is said to be planning to use any future funding from state-run Korea Development Bank (KDB), the second largest shareholder of GM Korea with a 17 percent stake, just for the manufacturing lines in Bupyeong and Changwon that are currently operate at full rates, according to sources.
Blaming the lack of preemptive actions by the central government, Gunsan City also demanded the central government to provide funding to GM Korea only under the condition that they are spent to continue operations of the manufacturing facility in Gunsan.
GM Korea’s production line in Gunsan, which began operations in 1997, had accounted for 20 percent of outbound shipments in North Jeolla Province. Recent poor sales, however, has led the operating rate of the factory that mainly produces mid-sized sedan Cruze and sport utility vehicle Orlando to plunge below 20 percent.
The Korean government also expressed “deep regret” over the surprise decision by GM over its Korean operations, calling it “unilateral.” It said it has been closely monitoring the restructuring process of GM’s Korean unit and shared necessary information. In response to GM’s decision, it added that KDB will discuss with GM so that it can conduct an objective and transparent due diligence to clearly define the current management condition.
The ruling Democratic Party also issued a statement, calling GM’s decision “unilateral and irresponsible.” It said GM is to be blamed for GM Korea’s poor management and urged for responsible action on the employment of facility workers.
By Kim Jung-hwan and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]