A revival plan that will be worth $2.8 billion in fresh investments and planned to be implemented through a period of ten years has bene proposed by General Motors for the turnaround of its loss-making business operations in South Korea. This was reported in Sought Korean media citing information gathered from a government official there.
South Korea’s state bank has some stake in the GM’s South Korean operations the U.S. auto maker has also requested the South Korean government to make some investments into the business, reported the media quoting the official with direct knowledge of the matter.
GM’s South Korean operations is amongst the largest overseas operations of the Detroit based car maker and the company is currently in discussions with the South Korean government about te options and possibilities for a revival of its loss-making business there.
But in order for the government to conclude whether the turnaround plans drawn up by GM was good enough for reviving the company’s south Korean business and for the government to decide on investments, it wants to closely examine the plan, the news report said. The total number of employees at the GM’s South Korean operations is 16,000.
“We need to have a closer look through the audit,” the official reportedly told the media.
Recently, GM had announced the closure of one of its production units in a city southwest of Seoul and this has prompted the government to call for an audit to be done on the company as well as its ‘opaque’ management, South Korea’s trade minister Paik Un-gyu had said on Wednesday.
“By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” Paik told lawmakers in parliament.
The efforts that the South Korean government is making to revive the GM Korea’s business would not result in wastage of taxpayers’ money, Paik added.
While Detroit based GM has already announced the closure of the production unit in Gunsan city by the end of May, the fate and the future of the other three production units of the company in South Korea would be decided soon the U.S. car maker has said.
(Adapted from CNBC.com)