Back to the current crisis unfolding in South Korea over General Motors' decision to shut
one of its production lines in the country.
With thousands of local jobs on the line,... top economic officials from the Korean government
are meeting behind closed doors this afternoon with GM representatives.
Before we take a closer look at the situation with an expert,... here's Shin Se-min with
more on the possible trend of big American companies moving back to the U.S. to stay
on the Trump administration's good side.
It's known as the birthplace of the compact Chevy Cruze and the Orlando SUV.
GM arrived in Gunsan, a small seaside town on Korea's western coast, more than 20 years
ago,… bringing with it jobs and a fresh lease of life.
But today,...
General Motor's Gunsan plant is at the brink of closure,... following the U.S. automaker's
bombshell announcement that eye-watering losses were forcing it to turn the lights off.
Just how bad is it?
In the last three years since 2014,...
GM Korea posted net losses of one-point-eight billion U.S. dollars,... while only operating
at 20 percent of capacity.
Explaining its decision, GM pointed to mushrooming manufacturing costs linked to rising wages,
aggressive labor union activity and the depressed local sales.
"GM's decision to shut its loss-making unit in Gunsan, which employs some 2,000 workers,
could just be the first taste of what's to come.
The president of GM International has given another ominous deadline,.. saying the company
will make "some important decisions on next steps" by the end of February."
One of those steps,... offering a two-point-two billion dollar debt-for-equity swap,.. in
return for financial support from the Korean government.
Close consultations between the government and the automaker are taking place,.. with
officials from the finance ministry also scheduled for a session on Thursday with GM representatives.
The emergence of the GM crisis comes at a crunch time for South Korea and the U.S.,…
long-time allies both economically and diplomatically.
Trade friction between the two is clear to see following the Trump administration's imposition
of hefty safeguard duties on Korean products and Washington's desire to overhaul the South
Korea-U.S. Free Trade Agreement.
"This clearly reflects the Trump administration's policy of bringing jobs back to America.
I think this case could influence the trade policies of the two countries,... and even
be a model for other global firms doing business in Korea."
The expert says Trump, who is targeting blue-collar workers in the mid-terms, may highlight the
situation as an example of his efforts to bring jobs back to America, jobs that he says
have been lost over years of allowing American firms to up sticks to relocate overseas.
Looking to avoid this kind of situation happening again,... experts say South Korea must get
serious about creating favorable business conditions for foreign firms.
These could include stripping back regulations and loosening the grip of the country's powerful
trade unions.
However, such moves would likely meet resistance and even if they are passed, such reforms
are unlikely to bear fruit for a number of months -- too late to help the GM workers
in Gunsan who wonder what their future holds.
Shin Se-min, Arirang News.
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