South Korea may declare crisis in city where GM plant is closing

SEOUL, Feb. 20 (UPI) -- The South Korean government plans to designate the city of Gunsan as a special employment crisis region, following General Motors' decision to close down a local factory.

Presidential office spokesman Kim Eui-kyeom said Tuesday that President Moon Jae-in ordered the government to take urgent measures to stabilize the city's economy.

Some 2,000 workers work in the Gunsan plant but its closure could affect up to 12,000 people employed in the factory's suppliers.

One in five Gunsan residents are expected to be impacted by the shutdown, KBS reported.

While the city doesn't meet the requirements to be classified as an employment crisis zone, Kim said the government will pursue the designation considering the seriousness of the situation.

The government's special response measures are likely to involve financial assistance for local authorities to provide job support and employment programs.

The spokesman added that the country's trade ministry is also seeking to designate the city as an industrial crisis zone, entitling it to financial assistance, and low-interest loans for local companies and small business owners.

However, the government is still unsure on whether to provide financial aid and incentives to GM Korea to keep its operations running.

Seoul officials said the company needs to show a plan to prove its commitment to resolving management issues and investing in local operations, before the government can consider rolling out supportive measures, as requested by the U.S. automaker.

Officials have also called for due diligence checks to be conducted on the company, which has been criticized for its lack of transparency and managerial problems that led to its Korea operations running at a loss.

On Tuesday, the National Assembly's task force on GM Korea met with Barry Engle, president of GM International, Hankook Ilbo reported.

According to lawmakers who attended the meeting, Engle promised the company will try to maintain 500,000 units of annual output from its Korean factories.

He also said it was possible for two new models to be allocated to the Bupyeong and Changwon factories but did not specify whether the assignment would depend on the South Korean government's support.

Meanwhile, the GM Korea labor union held a press conference on Tuesday, demanding the auto firm withdraw its plan to close the Gunsan plant, invest in capital and facilities and guarantee union participation in due diligence.