Tensions in Korea Alert Automakers, Including GM image

GM CEO Dan Akerson said the company will keep its eye open for the tense situation in Korea, as it already has a plan in case the situation worsens.

GM has 17,000 workers at its five plants in South Korea, where it manufactures almost 1.5 million vehicles annually. Around 145,000 vehicles of the total number are sold in Korea, the rest of them are exported to other markets, including the US.

“You’ve got to start to think about where you have the continuity of supply and safety of your assets and your employees,” Akerson said. “We are making contingency plans for the safety of our employees as best we can.”

Analysts say that South Korea is important not only for GM, but it is a vital link for all automakers and the global supply chain that all car makers depend on. North Korea threatened to attack South Korea and its main ally, the US, and George Magliano, senior principal economist with IHS Automotive, says that if this will happen ‘we’ve got a mess on our hands.’

“Whatever we get out of Korea is going to be put in jeopardy, and we have very little leeway in the short-run of getting around it,” said Magliano.

Jim Hall of 2953 Analytics LLP, says that if this scenario takes place, the entire industry will be affected and it would cause a slowdown of availability, but it would not stop production in the States. Ford, which relies on almost 24 suppliers in South Korea, said it will also closely monitor the situation in the region.

“They look at what happened with the earthquake in Japan and the flooding in Thailand,” said Magliano. “The Koreans are moving their own production out of Korea. They’re building components where they sell them, including in North America.”