SEOUL -- General Motors and South Korean authorities are headed toward a standoff as the automaker plans to shut one plant amid mounting losses.
South Korean officials will hold talks with GM about ways to keep the automaker's operations open, the finance ministry said in a statement Tuesday, after a meeting among financial authorities. Government-run Korea Development Bank will also hold talks with GM on conducting due diligence to assess its Korean business over the last few years, the ministry said.
GM CEO Mary Barra has been ditching poor-performing business units around the globe to play to the company's strengths. She warned earlier this month the company's operations in South Korea were in dire need of a turnaround, especially as the rise of expensive electrification and self-driving technology encourages companies to trim any units not earning their keep.
"We need to get to a business that is viable, sustainable and profitable and will keep growing," GM President Dan Ammann said in a phone interview. "Time is short and everyone needs to move with urgency."
The U.S. automaker will shutter the assembly plant in Gunsan by the end of May, cutting about 2,000 jobs as it tries to get its Korean business into the black. As a result of the closure, GM will take special charges of as much as $850 million in the second quarter, the company said in a statement Monday.
It's also in talks with union officials, government and key GM Korea shareholders about the cost-cutting changes it needs to keep its other plants there operating.
"The government expresses deep regret over GM's one-sided decision to suspend and shut down operations" of the plant, the finance ministry said.
GM Korea posted combined losses of 1.95 trillion won ($1.8 billion) in the three years through 2016, according to its regulatory filings. The business reported net income of 55.6 billion won in 2013.
At the end of 2016, GM Korea had 7.53 trillion won of assets, 7.52 trillion won in liabilities, and a debt-to-equity ratio of 867 percent.
The Gunsan plant makes the Chevrolet Cruze compact car and Chevy Orlando crossover. It's been running at just 20 percent of capacity, with about a third of the 34,000 cars it made last year going to the export market.
GM has three other plants in South Korea and employs 15,663 workers in the country, a spokesman said. The business exported Chevrolet cars to Europe before GM killed the Chevy brand in that market in 2013, putting a strain on the Korean operations.
GM's operations help create another 300,000 jobs for people working at its plants and suppliers, according to the carmaker's local union.
A spokesman for GM's Korea union said the company's decisions were unreasonable and absurd.
"It's unreasonable that the company tells us it will fire people while we are in negotiations for wages," the spokesman said. "The loss didn't come from workers. We can't admit this and it's absurd the company is blaming us for the loss after pulling out Chevrolet from Europe."
In order to stay, GM said it will need to see significant progress by the end of February in its talks with the union, government and Korea Development Bank, which owns 17 percent of the automaker's business there. China's SAIC Motor Corp. owns 6 percent, while GM has the remainder.
Ammann declined to specify what GM has asked for in negotiations, but said that as costs there have risen, it's made exports too expensive for many markets.
"The future of the business is in the hands of the stakeholders," Ammann said.
GM's manufacturing costs in Korea have gone up while its local sales plunged 20 percent last year. GM acquired financially troubled Korean carmaker Daewoo in 2002, but consumers there have still gravitated toward cars made by local players Hyundai Motor Co. and Kia Motors Corp.
Last year, GM sold its European Opel and Vauxhall brands to France's PSA Group for $2.3 billion and also exited India and South Africa. Before that, GM left Russia, Indonesia and Thailand.