April 20, 2024

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[THE INVESTOR] General Motors on May 31 shut down one of its plants in Korea as it moves to restructure its operations at home and abroad. 

The 260,000-units-a-year plant in Gunsan, about 270 kilometers southeast of Seoul, was hit hard by GM‘s decision to withdraw its Chevrolet brand from Europe in 2013. Its utilization rate plunged to a dismal 20 percent from 2016 amid rising labor costs.

The Gunsan plant, which opened 22 years ago, has stopped production of two Chevrolet models, the Orlando SUV and the Cruze compact, though GM Korea will continue to sell cars in its inventory in the domestic market.

There remains some 680 workers at the Gunsan plant out of its 2,000 workforce during its heyday. The company is mulling relocating 200 of them to other plants in Bupyeong, just west of Seoul, and Changwon, 400 km south of Seoul, a company spokesman said over the phone.

As for the remaining 480 workers, the government is considering paying them a maximum amount of 1.8 million won (US$1,700) in unemployment benefits per person on a monthly basis for three years. On top of this, the company and its union are in talks to provide 450,000 won a month to support these workers for three years, the spokesman said.

GM Korea said it has not decided yet on how it will deal with the closed Gunsan plant. There are no carmakers that have expressed an interest in acquiring the car production facilities.

As the Gunsan plant and its 135 subcontractors hired a combined 13,000 workers, or 20 percent of the port city’s overall employment, the closure is expected to have a significant impact on the regional economy.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)