General Motors (GM) has started its biggest restructuring since 2009. GM announced on Thursday (local time) that it would halt operation of seven additional plants and reduce its workforce by 14,700. Eight percent of the world's 180,000 GM executives will lose their jobs when this is done.
The five plants that GM announced on the day are all from North America (Differential, Ohio, Maryland, Michigan, and Ontario). The two additional plants that will be closed have yet to be determined. CNN reported that GM was closing three factories outside of North America until the end of 2019, and that the GM Gunsan plant had already been closed. 블랙잭
Although GM has closed its Gunsan plant in Korea, its Bupyeong, Changwon, and Boryeong plants are not completely off the list of candidates for additional closures. According to GM's "GM Business Portfolio," which was used as the basis for global restructuring, there are two main reasons for choosing factories to shut down: the potential rate of profit and the business sector's ability to do business. The reason why GM closed five factories in North America this time is because its North American automotive division received a lower-level assessment on both criteria.
The problem is that Korea GM's potential earnings rate and bad business performance were all evaluated lower than those of North American automotive businesses. GM has already sold out its businesses that have lower potential profit margins than South Korea (such as a voxhole brand) or projects that have low field power (such as a Russian factory).
On the other hand, businesses that received high reviews on the same standards are expanding their investments. For example, a North American sports utility vehicle (SUV) production plant or a Cadillac brand that received the highest possible return. In addition, South American businesses and commercial car businesses, which were assessed to have high business potential, are not subject to restructuring, even though their potential earnings rate is not relatively high. Given its past actions, GM is expected to select additional shut-down plants based on potential earnings rates and business field power. Based on this, it is not unusual for GM to close its additional plant in Korea. In the past four years, GM Korea has recorded operating losses of more than $3.4 billion (3 trillion KRW). GM Korea, which had increased its costs in restructuring in the first half of this year, is expected to lose about $1 billion (1 trillion KRW) again this year.
It is also a question of business field power. The number of domestic sales (74,595 units) of GM Korea this year decreased by 32.3 percent compared to the same period last year. October sales were the lowest among five carmakers in Korea. If Bupyeong, Changwon, and Boryeong factories are to survive in GM's portfolio, it will be a challenge to increase productivity and GM's operating power.
However, GM Korea is still mired in conflict between labor and management. The medium-sized sedan Malibu, which is carrying the fate of the Korean GMM, was released on Wednesday, but the metal labor union of the Korean Confederation of Trade Unions (KGM) carried a picket to make its announcement. They protested, "We changed the design of the Malibu bumper without consulting with the union."
It is highly likely that this will serve as a self-sufficiency issue when GM is looking for a place to shut down additional plants. This is because Malibu is a key model that determines the fate of South Korean factories in Bupyeong 2. With the discontinuation of the mid-sized SUV, the operation rate of Bupyeong 2 plant decreased by 30 percent and the working system changed (2-shift → 1 shift). The only vehicle in production at this factory is Malibu. If Malibu sells well, Bupyeong 2 plant can be restored, but if Malibu is not sold, GM may consider closing its Bupyeong 2 plant.
Korean GM labor and management are constantly clashing over how to separate R&D companies and operate after-sales service centers. The industry believes that the labor union's objection to the release of a key model to save the company is largely due to the need to raise 30,000 to 40,000 won per person starting next month to support unpaid workers at the Gunsan plant. The Korean GM labor union wants management to compensate for this, but it is difficult to demand it as the company signed a collective agreement in April.