The South Korean government has announced that the United States based automaker General Motors (GM) has decided to finally choose the Asian country to set up its Asia-Pacific headquarters. This is a further measure by the company as part of its commitment towards revitalizing it loss making venture in South Korea.
The South Korean industry ministry said in a statement that the agreement reached with the U.S. automaker will also boost the local suppliers of auto parts because the company has also conceded to purchase more auto parts form local suppliers of South Korea for its overseas operations and has decided to increase its budget for that purpose from about 2 trillion won ($1.85 billion) a year currently.
In exchange, financing would be provided for the South Korean suppliers of GM and other South Korean automakers by the government to help in developing auto parts for electric and self-driving cars as well as other critical auto components.
While not specifying the amount of financing that the government would engage in, a ministry source said that the funding would run into tens of millions of dollars.
GM had almost decided to file for bankruptcy for its South Korean business arm but decided to keep it running last month after much deliberations with the South Korean government. Apart from ensuring that the state-run Korea Development Bank grant it a secured a planned debt of $750 million, the U.S. automaker also managed to strike some major concessions from the labor union in relation to wages and benefits to employees.
A South Korean industry ministry official told the media that production, sales and technology development aspects for GM would be managed by the proposed new regional headquarters of the company for the entire Asia Pacific region that includes countries like Australia, India and Thailand but does not include China.
Currently, businesses of GM in South Korea, Australia, Southeast Asia, India, the Middle East and Africa are controlled and managed from the regional headquarters of the company - “GM International”, based in Singapore.
The automaker however cut down on the number of personnel based in its Singapore regional office last year in an effort to reduce operations in the region and concentrate on the more profitable markets of the company such as China and the U.S.
The U.S. car makers has already restructured its Thai business significantly and has stopped all production in its units in Australia and Indonesia.
The company has also decided to undertake restructuring in South Korea where it has already shut down one of the four production units and has laid off about 3,000 employees from its operations in the country.
(Source:www.reuters.com)
The South Korean industry ministry said in a statement that the agreement reached with the U.S. automaker will also boost the local suppliers of auto parts because the company has also conceded to purchase more auto parts form local suppliers of South Korea for its overseas operations and has decided to increase its budget for that purpose from about 2 trillion won ($1.85 billion) a year currently.
In exchange, financing would be provided for the South Korean suppliers of GM and other South Korean automakers by the government to help in developing auto parts for electric and self-driving cars as well as other critical auto components.
While not specifying the amount of financing that the government would engage in, a ministry source said that the funding would run into tens of millions of dollars.
GM had almost decided to file for bankruptcy for its South Korean business arm but decided to keep it running last month after much deliberations with the South Korean government. Apart from ensuring that the state-run Korea Development Bank grant it a secured a planned debt of $750 million, the U.S. automaker also managed to strike some major concessions from the labor union in relation to wages and benefits to employees.
A South Korean industry ministry official told the media that production, sales and technology development aspects for GM would be managed by the proposed new regional headquarters of the company for the entire Asia Pacific region that includes countries like Australia, India and Thailand but does not include China.
Currently, businesses of GM in South Korea, Australia, Southeast Asia, India, the Middle East and Africa are controlled and managed from the regional headquarters of the company - “GM International”, based in Singapore.
The automaker however cut down on the number of personnel based in its Singapore regional office last year in an effort to reduce operations in the region and concentrate on the more profitable markets of the company such as China and the U.S.
The U.S. car makers has already restructured its Thai business significantly and has stopped all production in its units in Australia and Indonesia.
The company has also decided to undertake restructuring in South Korea where it has already shut down one of the four production units and has laid off about 3,000 employees from its operations in the country.
(Source:www.reuters.com)
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