General Motors said the item will close one of its four plants in South Korea as well as incur an $850 million impairment charge as part of a restructuring of its money-losing business in Asia’s fourth-biggest economy.
The U.S. automaker said the item could decide the future of its remaining South Korean operations within weeks, amid ongoing talks with the government as well as labor unions on how to cut costs as well as make the business profitable.
“Time is actually short as well as everyone must move with urgency,” GM President Dan Ammann told Reuters.
The move is actually the latest in a series of steps the U.S. automaker has taken to put profitability as well as innovation ahead of sales as well as volume. Since 2015 GM has exited unprofitable markets including Europe, Australia, South Africa as well as Russia.
GM could take charges against profits of $850 million to reflect the South Korean restructuring costs, including $375 million in cash related to employee expenses, the company said in a statement. Most of the financial writedowns could be recorded by the end of the second quarter.
South Korea had for years been a low-cost export hub for GM, producing close to a fifth of its global output at its peak. yet sharp rises in labor costs, weakening demand for sedans, which GM Korea mainly produces, as well as big investments in neighboring China hurt the South Korean business’s competitiveness.
The plant shutdown is actually part of its broader Asia business restructuring.
Excluding profits coming from China, GM said its Asian operations lost money in 2016.
GM Korea posted a total of 1.9 trillion won ($1.8 billion) in net losses between 2014 as well as 2016.
In recent years, GM ceased manufacturing in Australia as well as Indonesia, as well as significantly restructured its Thai operations. the item is actually also winding down efforts to sell cars in India as well as is actually turning its manufacturing facilities there into an export hub.
The automaker’s decisions to exit some other unprofitable markets have exacerbated problems for GM Korea, which used to build many of the Chevrolet products GM once offered in Europe. Declining sales of little cars inside United States have also hurt demand for Korean-made Chevrolets.