DETROIT — The aggressive cost-cutting measures that led General Motors to sell its European business and scale back operations in several other international markets are expected to continue in 2018.
The newest target: Korea, where the company is struggling with rising labor costs, excess capacity and declining domestic car sales.
"We're going to have to take actions going forward to have a viable business," CEO Mary Barra said during a conference call last week to discuss the automaker's fourth-quarter and 2017 results.
Barra said officials are in discussions with minority owners and union officials involved with GM Korea that could lead to "some rationalization actions or restructuring." She said it's too soon to tell what those actions will be.
A restructuring of GM's Korean operation could combine elements of its Australia and India strategies. In Australia, it quit manufacturing but remained in the consumer market. In India, it kept manufacturing for export, but it abandoned the consumer market.
GM Korea, which was established in 2002 with the acquisition of failing Daewoo Motors, employed about 16,000 people in 2017, roughly two-thirds of them hourly workers. The operations comprise local sales of Chevy and Cadillac products, four assembly plants that supply a sizable portion of global output for the Chevrolet brand, four powertrain plants, a proving ground and an advanced engineering and design center that has served as a launch pad for top designers on key products such as the Chevrolet Bolt electric vehicle.
Last year, the operation sold about 132,377 vehicles in Korea — down 27 percent from a year earlier — and exported about 900,000 complete vehicles and vehicle kits to about 120 markets around the world.
But GM Korea now is pinched between falling sales in the home market and a lack of export markets to absorb production, said Park Sangwon, director of automotive analysis at Heungkuk Securities in Seoul.
"The economic scale never recovered from GM's pullout of Europe," Park said. "They need to give GM Korea some other markets, even the U.S. But I don't see that happening."
"It seems they are just letting it die off little by little," he added.