GM pres­i­dent calls for ‘shared sac­ri­fice’ to fix ail­ing South Korean op­er­a­tion

Arab News - - BUSINESS -

DETROIT: Gen­eral Mo­tors Pres­i­dent Dan Am­mann said the au­tomaker’s trou­bled South Korean oper­a­tions can be a “sus­tain­able, prof­itable busi­ness” if unions and the South Korean gov­ern­ment agree quickly on a re­struc­tur­ing.

GM has warned Korean of­fi­cials the unit faces a “cash cri­sis” in the first quar­ter with­out new fund­ing. Nearly 2 tril­lion won ($1.88 bil­lion) of GM Korea’s debts to its par­ent are due by the end of March or early April, ac­cord­ing to a reg­u­la­tory fil­ing.

“Time is short and ev­ery­body must move with ur­gency,” Am­mann told Reuters in an in­ter­view on Mon­day when asked if March 31 was a dead­line for ac­tion.

The state-funded South Korean De­vel­op­ment Bank said on Mon­day it had be­gun a due-dili­gence re­view of GM’s South Korean unit as part of its de­ci­sion whether to in­ject more cap­i­tal into the money-los­ing op­er­a­tion.

GM of­fi­cials have out­lined plans to in­vest up to $2.8 bil­lion in the South Korean oper­a­tions and con­vert into eq­uity about $2.7 bil­lion in debt owed by the unit to the par­ent com­pany, ac­cord­ing to Korean gov­ern­ment of­fi­cials and a GM let­ter re­viewed by Reuters.

Am­mann said that if the au­tomaker, the South Korean gov­ern­ment and unions can agree on a re­struc­tur­ing plan “there is in­vest­ment in the busi­ness, new prod­uct pro­grams that we would look to al­lo­cate” to South Korea.

“It’s a clas­si­cal re­struc­tur­ing where ev­ery­body needs to con­trib­ute some­thing in or­der for ev­ery­body to end up in a bet­ter place with a sus­tain­able, prof­itable busi­ness.”

New prod­uct in­vest­ments would re­sult in South Korea build­ing ve­hi­cles that are part of GM’s global prod­uct lineup and could be sold in other mar­kets, he said.

GM on Tues­day asked South Korea to des­ig­nate its fac­tory site in the city of Bupyeong as a for­eign in­vest­ment zone to be el­i­gi­ble for cor­po­rate tax ben­e­fits, an of­fi­cial at In­cheon Metropoli­tan City told Reuters.

The of­fi­cial de­clined to elab­o­rate on GM’s pro­posal.

To be el­i­gi­ble for the des­ig­na­tion, man­u­fac­tur­ers have to con­struct new fac­tory fa­cil­i­ties with for­eign in­vest­ment of more than $30 mil­lion, or in­vest more than $2 mil­lion in build­ing or ex­pand­ing re­search and de­vel­op­ment fa­cil­i­ties. —

GM Korea work­ers from the Gun­san fac­tory protest in Seoul as the com­pany faces a fund­ing cri­sis. (Reuters)

Newspapers in English

Newspapers from Saudi Arabia

© PressReader. All rights reserved.