General Motors is already scaling back operations in South Korea ahead of an announced plant closure there in May.
Three days before announcing the shuttering of its Gunsan assembly plant on Feb. 12, GM ceased production at a nearby powertrain factory that employed about 100 of the roughly 2,000 employees that it plans to cut as the plant closes, Automotive News has learned.
The powertrain facility produced 2.0-liter diesel engines for the Chevy Captiva, which is built at a plant roughly 100 miles north in Incheon. Engines for the Chevrolet Cruze and Chevrolet Orlando, which the Gunsan plant builds, are being imported from Opel in Europe.
Closing the powertrain plant is expected to have minimal impact on production for GM's Bupyeong operations in Incheon, which produce powertrains and assemble the Captiva, Aveo, Trax and Malibu for Chevrolet. A GM spokesman said the plant has other sources for the engines.
Following the closure, GM also plans to cease operating an "exclusive dock" for shipping less than 1.5 miles away from the plant.
GM expects the closure to cost up to $850 million, including about $475 million in noncash asset writedowns and up to $375 million in primarily employee-related cash expenses. The charges will be substantially recorded in the second quarter, GM said.
The decision to close the facilities came 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."