With General Motors cutting the plug out of Europe for Chevrolet, the South Korean unit – which made almost half of all Chevys around the globe, was left scrambling for options.
If we go back in time a little bit – no more than two years ago actually, GM’s South Korean operation was one of its most important in the world, working full steam ahead to produce 40% of the total Chevrolet tally. Back last February, GM poured even more money into it, with a $7.3 billion investment plan to upgrade over the next four years the local engineering center, design studio and also the four manufacturing facilities.
But, over the course of just a few months, local unions fought the company and obtained bigger wages and reduced work hours, the local currency began to rise and eat up the company’s export earnings. But certainly what looked like a killer blow was GM’s decision to move Chevrolet out of Europe – which meant the South Korean operation had as much as 150,000 units of excess capacity.
“I have zero intent of losing volume, share or profitability,”says Sergio Rocha, the 35-year GM engineering veteran in charge of the local unit. “GM Korea is moving in the right direction.”
The GM Korea CEO managed to renegotiate contracts with unions, is on its way of delivering a new work schedule that would make the plants run only 16 – from 20 – hours a day, cutting excess capacity of 100,000 units.
Besides that, GM proves it’s still considering the South Korean unit a prime asset – it just delivered at the cost of $40 million an enhanced design center. Also, Gm also made the decision to end manufacturing in Australia – which is an opportunity to expand deliveries from Korea there.
Via Automotive News Europe
by Aurel Niculescu
) - Tuesday, May 6th, 2014 - filed under General Motors
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