GM Korea confirmed investment of $750 million in its factory in Changwon, South Gyeongsang Province, for the next four years to act on its vowed commitment the Korean operation for at least a decade.
Sources from the auto industry said on Wednesday that GM Korea announced the plan to invest $750 million during a groundbreaking ceremony for its new paint shop in Changwon factory on Monday. The U.S. auto giant did not make an official announcement on the investment amount for the Korean operation due to the ongoing drastic restructuring at its home involving massive job cuts, according to the sources.
The company is said to have a plan to spend about 350 billion won ($293.9 million) on building the new three-story paint shop that will be sitting on an area of 83,000 square meters. The remaining 500 billion won will go to upgrade the existing manufacturing facilities in Changwon to carry out its plan to roll out new cross-over utility vehicles for both domestic and global market from 2023, sources said.
When the work is done, Changwon factory’s capacity is expected to increase from 210,000 units a year to 250,000 units.
The Changwon City government also expected the large-scale investment by GM Korea would contribute to boosting output worth 1.8 trillion won and adding 12,000 jobs in the region.
The investment pledge testifies to GM’s will to remain in Korea, according to head of a GM Korea’s partner company in Korea. All it needs right now is cooperation from the labor union to settle its long-standing dispute with management to normalize production and sales, he added.
GM headquarters pledged new capital after it drew a contribution from the Korean operation’s second stakeholder and state lender Korea Development Bank last year. The latest investment is part of it.
Despite ongoing efforts by the company to normalize the operation since the shutdown of one of four Korean factories and the capital injection, the management and labor union have been in constant dispute over various issues including collective agreement terms.
In December 2018, workers rallied against the company’s plan to spin off its R&D unit due to fears that the move was a prelude to broader restructuring, which the company flatly denied. Despite the fierce opposition, GMTCK, the demerged R&D entity of GM’s Korean unit, went into operation in January.
GM Korea has not recovered sales and utilization rates yet.
By Moon Ji-woong and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]