[Editorial] Government should not be hasty in providing assistance to GM Korea

On Feb. 13, the GM Korea announced it would be closing the factory in Gunsan, North Jeolla Province, by May.

On Feb. 13, General Motors announced that it will close its Gunsan factory by the end of May in a restructuring move that will affect 2,000 workers. In announcing the move, GM Korea stated, "GM headquarters has determined that it is no longer feasible to maintain all our production facilities at their current level, so as a first step toward overcoming our financial difficulties, we have decided to shut down the Gunsan plant."

At one time, the Gunsan factory turned out 80,000 vehicles a year, but with declining sales, production has gone down to 30,000 per annum since 2016, and the number of workers employed there has also been reduced from 3,500 to 2,000. Recently, the plant has been running at only 20 percent of its total production capacity.

GM has discussed the problem of stabilizing its financial situation with the Korean government, and the government has said it has continued talking with the company to work out ways whereby it can help to normalize GM's business here, but GM has yet to come up with any specific plan. Closing down the least productive of its four plants in Korea seems to be GM's way of forcing the government to provide as much assistance as possible. It amounts to demanding favorable negotiations by holding workers' jobs and the regional economy hostage.

GM has not even tried to hide its intentions. Barry Engle, president of GM International, issued a statement saying, "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." The vague expression "important decisions" sounds like a threat.

GM Korea's difficulties are all self-inflicted by m`ismanagement. In the four years since 2014, the company has gone in the red to the tune of 3 trillion Korean won (US$2.72 billion). Last year alone, sales fell by 12 percent. In the name of global reorganization, GM reduced its exports from Korea without coming up with a way to compensate for the ensuing losses. There are also indications that abnormal dealings between GM Korea and GM headquarters, which greatly favored the home office, have caused further losses, Nevertheless, GM has again and again given our government an ultimatum by threatening to pull out of Korea. This is an irresponsible attitude.

The government should not be hasty to provide assistance. It has to thoroughly investigate to clearly establish what the real causes behind GM Korea's situation are and to find out how committed to normalization the company truly is. Otherwise, the government may wind up throwing good money after bad. GM could even just take the money and run. The damage could affect the country's entire economy.

The most urgent order of business is how to deal with the loss of jobs, both at the Gunsan factory and at its subcontractors. The closing of the GM factory has the citizenry of Gunsan in shock as it comes in the wake of the closing of the Hyundai Heavy Industries shipyard last July. The government needs to take action quickly to restabilize the region's economy.

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