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GM Korea to cease production at Gunsan plant

Published 13 February 2018

GM Korea said that it will stop production and close its Gunsan plant by the end of this May.

The Gunsan facility has been increasingly underutilized, running at about 20% of capacity over the past three years, making continued operations unsustainable.

This announcement occurs after a careful review of the company's operations, which have sustained significant losses for the past several years.

GM Korea president and CEO Kaher Kazem said: "This is a necessary but difficult first step in our efforts to restructure our operations in South Korea.

"We recognize the contribution and support of our employees, the wider Gunsan and Jeonbuk communities and government leaders, particularly through the most recent difficult period. "We are committed to supporting all of our affected employees through this transition."

GM has been aggressively addressing underperforming businesses globally, and is now focused on finding a solution for its South Korean operations.

The company has proposed to its key stakeholders — including its labor union, the South Korean Government and key GM Korea shareholders — a concrete plan to stay in the country and turn the business around that requires the full support of all parties. The proposal includes significant product-related investments in South Korea and would preserve thousands of jobs.

GM executive vice president and GM International president Barry Engle said: "The performance of our operations in South Korea needs to be urgently addressed by GM Korea and its key stakeholders.

"As we are at a critical juncture of needing to make product allocation decisions, the ongoing discussions must demonstrate significant progress by the end of February, when GM will make important decisions on next steps."

As a result of this action, GM expects to take charges of up to $850m, including approximately $475m of non-cash asset impairments and up to $375m of primarily employee-related cash expenses.

Substantially all of these charges will be recorded by the end of the second quarter of 2018, and will be treated as special and excluded from the company's EBIT-adjusted and EPS-diluted-adjusted results.

Source: Company Press Release