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S. Korean president calls for urgent measures to respond to GM factory closure

By Jennie Oh
S. Korean president calls for urgent measures to respond to GM factory closure
General Motors Co. (GM) sign at the entrance to GM's assembly plant in Gunsan, some 270 km south of Seoul, South Korea. Photo by Yonhap/UPI

SEOUL, Feb. 19 (UPI) -- South Korean President Moon Jae-in has urged the government to actively respond to General Motors' decision to close down a plant in a southern city, which will impact thousands of local jobs.

This comes after the U.S. automaker last week announced it would pull the plug on its Gunsan factory by end of May due to faltering production levels, and decide on the fate of its remaining three plants in South Korea.

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The Gunsan plant directly employs some 2,000 workers out of its 16,000-member workforce in Korea. However, regional authorities say 135 small-and-medium businesses, hiring some 17,000 workers, supply auto parts and equipment to factory.

The first and second tier supply chain accounts for 22 percent of the city's employment, which means one in five workers in Gunsan will be affected by factory's closure.

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Moon acknowledged the dilemma in a meeting with key aides on Monday, saying that "the drop in employment will be too difficult for Gunsan City and North Jeolla Province to bear."

He called for intragovernmental efforts to respond to the crisis and stabilize the local economy by forming a special task force.

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Meanwhile, GM Korean labor union workers and subcontractors have been calling on the central government to provide financial support to the auto firm to keep the plants in Korea up and running.

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However, critics say GM Korea has been operating at a loss due to managerial decisions such as paying higher-than-average interest rates on loans to its parent company as well as selling finished vehicles to overseas affiliates at excessively low prices.

Also at question is the sustainability of GM's operations, as it is yet unclear whether the company will allocate new vehicles to South Korean plants. The U.S. automaker has been cutting back on its global operations and pulling out of unprofitable markets.

GM Korea said it will hold negotiation talks with its unionized workers beginning Wednesday.

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