GM finally shuts down plant in S. Korean port city without ceremony

Lim Chang-won Reporter Posted : 2018-05-31 16:47 Updated : 2018-05-31 16:47
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[Yonhap Photo]

SEOUL -- A standing signboard reading "Closed!" was placed at the gate of a GM plant in the southeastern port city of Gunsan Thursday, putting a permanent end to its operation that began 22 years ago.

There was no ceremony to shut down the plant in Gunsan, 178 kilometers (110 miles) southeast of Seoul, which used to produce two GM models, the Orlando SUV and the Cruze compact. In February, GM decided to close the plant as part of its global business restructuring.

The plant had hired about 2,000 workers and thousands of other workers hired by subcontractors, serving as a crucial economic pillar in the region. The closure came three weeks after GM agreed to extend a bailout of $7.15 billion to its business in South Korea.

For its part, Korea Development Bank (KDB), the second-largest shareholder with a 17 percent stake, agreed to inject $750 million into GM Korea by the end of this year. The state-run lender will be given a veto power in key management decisions.

The U.S. carmaker will convert $2.8 billion owed by GM Korea into shares by the end of this year and extend loans worth $3.6 billion for facility investment. GM cannot sell any of its stake in GM Korea over the next five years with its stake staying above 35 percent from 2023 to 2028.

For its long-term presence, GM will set up its Asia-Pacific headquarters in South Korea, run a crash test site at its research and development center and build a new painting factory. The company promised to produce two new models in South Korea, but GM's new Asia-Pacific office in South Korea will not cover in China.

A memorandum of understanding signed by South Korea's trade, industry and energy minister Paik Un-gyu and GM International President Barry Engle called for production of auto parts in GM's local design and technology center. GM agreed to collaborate on the development of technologies for autonomous driving and electric vehicles.