"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", says Kaher Kazem, president and CEO of GM Korea. We've already begun conversations with the key stakeholders in GM Korea, including our minority owners and the union, and being very clear that we need to improve the financial and operating performance.
In a research note last week, Barclays analyst Brian Johnson said restructuring Korea might not have a "significant impact" on GM's bottom line but "serves as a reminder of how nimble management has been, playing only in areas where it can win", according to the Wall Street Journal.
GM slipped 0.2 percent to $41.93 as of 9:35 a.m. Tuesday in NY. Cumulative losses over the last four years stand at W3 trillion (US$1=W1,086).
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. Since 2015 GM has exited unprofitable markets including Europe, Australia, South Africa and Russian Federation.
The Korean government, meanwhile, expressed deep regret over GM's "unilateral" decision, but said will have Korea Development Bank to work with GM to study the situation at the business.
The local arm said it has proposed to its labor union and the South Korean government a concrete plan to remain in the country and turn the loss-making business around, which it said would require the full support of all parties.
Ultra-processed Foods may be Associated with a Higher Risk of Cancer
It comes after a Guardian report revealed how half of all food bought by United Kingdom families is now ultra-processed. A new study suggests that the so-called ultra-processed foods can boost cancer risk by a significant amount.
In January 2017, GM said it would invest an additional $1 billion in the U.S. and move production of some parts from Mexico to the U.S. Other automakers have taken steps to build more models in the U.S. Fiat Chrysler Automobiles (FCAU) recently announced that Mexican production of heavy-duty Ram pickup trucks will move north of the border in 2020.
Details of discussions with the Korean government have not been disclosed, but Trade Minister Paik Ungyu told reporters that, "Any support to GM Korea depends on the content of its new investment". In addition, the Korean operations have had rising costs in recent years, and GM has shifted much of its attention in Asia to China, where labor costs are lower and the economy is growing more quickly. Excluding profits from China, GM said its Asian operations lost money in 2016, according to Reuters. Declining sales of small cars in the United States have also hurt demand for Korean-made Chevrolets.
The plant is located in Gunsan, 270 kilometers south of Seoul, which employs some 2,000 workers.
The factory was running at about 20 percent of its full production capacity previous year, GM said.
"Even if GM Korea decides to stay, speculation around a withdrawal will keep consumers from buying GM cars". The Detroit automaker owns 77 percent of the operations while GM's main Chinese partner, SAIC Motor Corp Ltd, controls 6.0 percent.