Trump's 'America First' effect behind GM's decision to shut local plant?
- 6 years ago
We are going to take a closer look at the unfolding crisis surrounding GM's decision to shut one of its production lines in Korea.
A number of experts have suggested that GM's move may be the start of a trend of big companies moving back to the U.S. to stay on the Trump administration's good side.
It also has officials here asking what Seoul can do to prevent such a damaging situation happening again in the future.
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 move
A number of experts have suggested that GM's move may be the start of a trend of big companies moving back to the U.S. to stay on the Trump administration's good side.
It also has officials here asking what Seoul can do to prevent such a damaging situation happening again in the future.
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 move