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GM to close plant in South Korea in restructuring

GM to close plant in South Korea in restructuring

-South Korea trade agreement.

GM has three more plants in South Korea.

GM could turn to China - where it builds the Buick Envision - as an export base if it can't bring down costs in South Korea.

"It's unreasonable that the company tells us it will fire people while we are in negotiations for wages", the spokesman said. Image source: General Motors. "That is a really significant statement".

It's not immediately clear what those "next steps" may be, but it seems obvious that GM is leaving everything on the table-including a complete exit from South Korea.

GM indicated in a statement the company is working with its labor union and other stakeholders to make other investments in South Korea to save jobs.

"We need to get to a business that is viable, sustainable and profitable and will keep growing", GM President Dan Ammann said in a phone interview. GM Korea's business also includes several engine plants and an engineering and engineering center that has carried out a significant amount of work to create the Chevrolet Bolt electric vehicle. GM has since 2015 exited unprofitable markets in rapid succession, including Europe, Australia, South Africa and Russian Federation. Just as Trump has done in the United States, Moon has pledged to create more jobs and provide job security as his top economic policy. GM stock has lost just under 1% so far this month as the S&P 500 Index dropped nearly 6%.

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

Last year, GM Korea sold about 132,377 vehicles in Korea - down 27 percent from a year earlier - and exported 392,170 vehicles to 120 markets around the world.

GM expects the closure to cost up to $850 million, including about $475 million in noncash asset impairments and up to $375 million in primarily employee-related cash expenses. GM would record this by the end of the second quarter of 2018 and will be excluded from the company's EBIT-adjusted and EPS-diluted-adjusted results.

South Korea has been a low-priced vehicle export destination for the firm with a vehicle production estimated at one-fifth of its global automobile production.

The plant shutdown is part of its broader Asia business restructuring. Excluding profits from China, GM said its Asian operations lost money in 2016, according to Reuters.

GM Korea's combined sales plunged 12 percent on-year to 524,547 vehicles from 597,165 for the whole of 2017. Declining sales of small cars in the United States have also hurt demand for Korean-made Chevrolets. GM Korea sold 132,377 vehicles in its home market previous year while exporting roughly 390,000 vehicles to 120 global markets, according to Automotive News. It meant "GM's obligation on certain things" such as making decision on what products it will allocate and what financial matters it has to fix as in "mutual" decision between GM Korea and its head office, he added. GM owns 77 percent of the operations while GM's main Chinese partner, SAIC Motor Corp., controls 6 percent.