GM Looks to Cut Costs Once Again, Could Lose South Korean Plant

After massive cost cutting in recent years, General Motors looks to do more of the same. This is time, it's its Korean venture that's on the chopping board.

In an interview held early this February, CEO Mary Barra said officials are "in discussion" with GM Korea minority owners and union officials, and the result could be "some rationalization actions, or restructuring."

"The current cost structure has become challenging and we're going to have to take actions going forward to have a viable business," she said at the interview, where she also shared the automaker's fourth-quarter results.

The talks follow a succession of massive restructuring for GM with its operations outside of North America. Since 2013, GM has conducted dramatic cost-cutting measures in many of its markets, including Australia, Indonesia, Russia, and Thailand.

In 2017, GM did two massive restructuring moves. The first was the sale of its European Opel/Vauxhall operations to PSA Group in 2017. It also pulled out its operations in Venezuela, spending $80 million in the process. The company spent $540 million in total for its restructuring efforts last year.

Following the sale of its European operations, the company announced its upcoming restructuring plans, which included the handover of GM South Africa to Isuzu Motors, and the refocusing of GM India manufacturing operations for 'export only' vehicles.

With talks circulating that GM will eventually shutdown the South Korean plant, Barra said it's a little premature to say so, and emphasized that discussions are still ongoing. Before any decision can be made however, she said officials are being "very clear" with all stakeholders that operations must first be improved.

GM is currently focusing its restructuring efforts on Korea, although Barra said they are also looking into several other countries. She declined to give any examples.

As for its fourth quarter profits, GM said that it posted record earnings in the Asian region, amounting to $1.3 billion in 2017. The company did not divulge whether South Korea was profitable or not.

UPDATE: GM has confirmed that it will cease production and close its Gunsan plant in South Korea "by the end of May 2018." According to the American carmaker, the Gunsan facility is underutilized, running at about 20 percent of capacity over the past three years, "making continued operations unsustainable."