General Motors plans to close one of its four South Korean assembly plants as the first step in a larger restructuring of its unprofitable GM Korea operations.
The automaker late Monday said it will cease production and close its Gunsan plant by the end of May. The factory produces the Chevrolet Cruze and Chevrolet Orlando, according to the company's website.
GM says the plant, which employs about 2,000 people, has been increasingly underutilized, running at about 20 percent of production capacity over the past three years, "making continued operations unsustainable."
GM expects the closure to cost up to $850 million, including about $475 million in noncash asset impairments and up to $375 million in primarily employee-related cash expenses. All of the charges will be substantially recorded in the second quarter, GM said.
The decision to close the factory comes less than a week after GM CEO Mary Barra said company officials were "in discussions" with minority owners and union officials involved with GM Korea that could lead to "some rationalization actions or restructuring."
"We're going to have to take actions going forward to have a viable business," Barra said during a conference call on Feb. 6 to review the automaker's fourth-quarter and 2017 financial results.
A GM spokeswoman declined Monday to provide additional details of the turnaround plan.
"This is the first step in a holistic plan to turn GM Korea into an acceptable return on investment," she said in an email. "As the plan progresses, we’ll be able to share specific details."