GM Korea says it'll be shutting down one of its four car assembly plants by the end of May -- the plant in the southwestern city of Gunsan -- due to a plunge in sales.
The plant had been producing around 260-thousand units a year, and had a workforce of around 2-thousand people.
But recently its operation rate fell to 20-percent meaning only two out of ten production lines are up and running following a drop in exports to Europe and a shortage of supplies.
The company estimates its accumulated net loss has reached nearly 2.3-billion U.S. dollars over the past four years, and says it has been in touch with the Korean government for support to improve its operations in the country.
The announcement of the shutdown of the Gunsan plant comes amid rumors of a complete pullout from the country following years of faltering operations by GM Korea, even after the government said it's willing to review management improvement plans once the company submits them.
A local expert views the company's decision as a way of pressuring the government for its immediate support as the local elections in June approach, and could serve as a barometer of how the government is doing in terms of reducing unemployment.
(Korean ed: steve)
"Even if the company is able to receive government support, it's uncertain whether it will successfully get back on its feet unless there's a huge concession from its labor unions and it manages to secure new profit lines. If the automaker fails to reach an agreement with the unions or the government, there's a high chance it'll gradually lead to more shutdowns at other facilities in Korea."
In response to the shutdown of the plant, the Ministry of Strategy and Finance expressed deep regret at GM Korea's unilateral decision to shutter operations, and says it will try to work with the company to normalize GM Korea's management, taking into account its impact on job losses, not just in Gunsan, but elsewhere in Korea too.
Kim Ji-yeon, Arirang News.