- An agreement with labor unions was announced alongside the carmaker's Q1 earnings.
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GM bucks the odds and saves its South Korean division (GM)
GM will infuse GM Korea with $3.6 billion in new funding and avert a bankruptcy filing. The proposal for GM Korea should soothe what had become a challenging situation for the carmaker, GM Korea's workers, and the South Korean government.
When General Motors announced expectation-beating first-quarter earnings on Thursday, it added that the company has reached an agreement with labor unions at its struggling GM Korea division, averting a bankruptcy filing that could have come this week.
"With Korea, we've done the major areas we need to address," GM CEO Mary Barra said on a conference call with analysts after earnings were announced.
"There's a couple of other countries where we have work to do," she said. "Not to exit, but to improve profitability. And we're on it."
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The proposal for GM Korea should soothe what had become a challenging situation for the carmaker, GM Korea's workers, and the South Korean government. Earlier, GM said that it would close a plant in the country by May and put the money-losing division on notice, setting off speculation that unless GM Korea could develop a turnaround plan, the company would leave the country, as it has done on Russia with its Chevy brand and by selling Opel, its European division.
GM reported a nearly $1 billion charge for GM Korean operations in the first quarter, but CFO Chuck Stevens told analysts that restructuring operations there could result in half a billion dollars in yearly savings.
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