SEOUL, South Korea,
Feb. 12, 2018 /PRNewswire/ -- GM
Korea Company (GM Korea) announced today that it will cease
production and close its Gunsan plant by the end of May 2018. The Gunsan facility has been
increasingly underutilized, running at about 20 percent 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.
"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,"
said Kaher Kazem, president and CEO
of GM Korea. "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.
"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,"
said Barry Engle, GM executive vice
president and president of GM International.
As a result of this action, GM expects to take charges of up to
$850 million, including approximately
$475 million of non-cash asset
impairments and up to $375 million 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.
Based in Incheon, Korea, GM Korea has made significant
contributions to the Korean economy and automotive industry over
the last 16 years, producing 10 million vehicles since its
establishment in 2002. GM Korea supports approximately 200,000
direct and indirect Korean jobs. In 2017, GM Korea sold 132,377
units in Korea and exported 392,170 vehicles to 120 markets around
the world. Additional information on GM Korea and its products can
be found at www.gm-korea.co.kr.
General Motors Co. (NYSE: GM) has leadership
positions in the world's largest and fastest-growing automotive
markets. GM, its subsidiaries and joint venture entities sell
vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden,
Jiefang and Wuling brands. More information on the company and its
subsidiaries, including OnStar, a global leader in vehicle safety,
security and information services, can be found
at http://www.gm.com.
This press release and related comments by management may
include forward-looking statements. These statements are based on
current expectations about possible future events and thus are
inherently uncertain. General Motors' actual results may differ
materially from forward-looking statements due to a variety of
factors, including: (1) our ability to deliver new products,
services and experiences that attract new, and are desired by
existing, customers and to effectively compete in autonomous,
ride-sharing and transportation as a service; (2) the volatility of
global sales and operations; (3) adoption of, changes in, or the
introduction of novel interpretations of, laws, regulations or
policies particularly those relating to free trade agreements, tax
rates and vehicle safety and any government actions that may affect
the production, licensing, distribution, pricing, or selling of our
products; (4) the ability of suppliers to deliver parts, systems
and components without disruption and on schedule; (5) our highly
competitive industry; (6) compliance with laws and regulations
applicable to our industry, including those regarding fuel economy
and emissions; (7) the cost and effect on our reputation of product
safety recalls and alleged defects in products and services; (8)
our ability to successfully and cost-efficiently restructure
operations in various countries with minimal disruption; and (9)
our ability to realize production efficiencies and to achieve
reductions in costs. A further list and description of these risks,
uncertainties and other factors can be found in General Motors'
Report on Form 10-K for the fiscal year ended December 31, 2017, and subsequent filings with
the U.S. Securities and Exchange Commission. General Motors
cautions readers not to place undue reliance on forward-looking
statements. General Motors undertakes no obligation to update
publicly or otherwise revise any forward-looking statements.
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SOURCE General Motors Co.