Asia Minute: GM’s Korea Surprise
General Motors announced this week it is closing an assembly plant in South Korea. The company says the move is based on economics, but the story also carries a layer of politics. HPR’s Bill Dorman has more in today’s Asia Minute.
Right in the middle of the Winter Olympics, General Motors announced it will be closing one of its four assembly plants in South Korea. And the future of the other GM operations in the country is in question.
The company is in talks with the government and unions about cutting costs—with the president of GM Korea telling Reuters “Time is short, and everyone must move with urgency.”
GM said the latest plant closing was “unavoidable” since it had been operating at less than 20 percent of capacity for the past three years.
President Trump made it sound like GM was shutting down production in South Korea to bring it back to the United States—saying “they’re moving back from Korea to Detroit” and blaming the U.S. Korea Free Trade Agreement.
But a GM Korea spokesperson denied any production was shifting back to the United States—telling the Joon Ang Daily “there is no reason” for such a move.
The Korea Herald reports local critics say GM management has intentionally inflated the losses of its operations in the country. That includes allegations of charging high interest rates for working loans and draining funds of an unreasonable level from local operations to pay for global research and development.
South Korea’s Financial Supervisory Service is looking at the financial dealings of GM Korea, but so far has found nothing improper.
A decision on GM’s other Korean operations could come within the next two weeks.