GM would send execs to run Daewoo

DETROIT - General Motors will send fewer than 25 executives to Korea to run the Daewoo successor company if the deal to buy key automotive assets of Daewoo Corp. goes through.

CEO Rick Wagoner said GM is determined that the new Daewoo will not drain GM's management or financial resources. Daewoo middle management is strong, allowing GM to keep direct management involvement minimal, he said.

"I think that under the circumstances that we're going in, we'll want to put in a sprinkling of senior people," Wagoner said in an interview Tuesday, Nov. 6. "We're talking 10 or 20, not 50 or 100. Maybe it's 25. In the context of the GM world, I think that's quite reasonable."

Similarly, Wagoner said GM will continue Daewoo retail operations in North America and Europe only if they can be profitable.

"Philosophically, if selling vehicles in Romania is a money-loser for Daewoo in Korea, we can't do that," he said. "Daewoo has to be stand-alone financially." But, he added, GM still is studying Daewoo export sales: "That's the area we've spent the least time on. Our strategy is not fully thought out."

GM has said its main goal is gaining entry to Korea and adding capacity to serve Asia-Pacific markets.

Wagoner said GM expects a final deal by the second quarter of next year. GM expects at least one of its alliance partners - Fiat Auto S.p.A, Suzuki Motor Corp., Isuzu Motors Ltd. and Subaru parent Fuji Heavy Industries Ltd. - to take an equity stake in the company.

Under the deal announced Sept. 21, GM and its partners would pay $400 million for 67 percent of the new company. Daewoo's creditors would pay $197 million for 33 percent. GM would be the largest single shareholder but would not hold a majority stake.

The new company would own Daewoo plants in Changwon and Kunsan, r&d and die-casting operations at Pupyong, manufacturing plants in Egypt and Vietnam, and 22 Daewoo sales companies outside Korea. Also, it would buy vehicles and components from the older Pupyong plant for six years, giving it all of Daewoo's Korean production capacity.

You can reach Dave Guilford at dguilford@crain.com

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