GM Korea to have started to sell Gunsan plant to a third party…Much problem such as recruitment & price
Ye Jin Soo | jinye@ | 2018-02-26 10:55:08
The Korean government`s due diligence on GM Korea is scheduled to begin this week, and the focus is on how to deal with the disposal of the Gunsan plant in Korea.
According to the automobile industry on February 25, the sale of a package including existing workers is being discussed with a third party sale method of GM-Gunsan plant in Korea centering on the government and local economic circles.
The government is considering whether it will be able to apply the `Hose Equation Solution`, which will be converted to an electric vehicle factory after the sale of a third party to the Gunsan plant, to the domestic market. Barry Engel, president of GM Overseas Business (GMI), said on August 20 that he will visit the National Assembly to discuss the possibility of selling third parties at a meeting with lawmakers.
In the financial investment industry, Shanghai GM, which owns 6.02% of Korea GM`s three largest shareholders, is expected to take over the plant. Shanghai has recently strengthened cooperation with GM in research and development, and last year acquired GM`s India Halol plant. However, Kim Pil-soo, a professor at the Department of Automotive Engineering at Daelim University, said, "I think that the possibility of the takeover is low because Shanghai car was caught up in the controversy over the ship during the Ssangyong accident."
Meanwhile, the acquisition price issue is also a variable. It is a common view among experts that the process of selling third parties is very difficult due to the problem of succession to employment and the huge acquisition cost. An industry representative said, "The value of the Gunsan plant can be maintained when manpower, automobile production facilities and land are in tandem, and when the facilities and land are separated and sold, the value is significantly lower. GM`s headquarters has pointed out that the high-wage and low-efficiency problems of the Gunsan plant are also a stumbling block. "The Gunsan factory is the most recently built factory in Korea with relatively new facilities. The acquisition cost is expected to be high, as it has facilities capable of producing 300,000 units annually.
A specialist from the securities industry stated, "Samsung Motors, with KRW 3 trillion invested, sold for KRW 300 billion, which is one tenth of the price of Renault, but it will be difficult to sell such a low price now.”It is a question of whether or not it will be the actual buyer."
Some electric vehicle manufacturers are suggesting to the government that the Gunsan factory site should be replaced with a new industrial complex and ultimately should be used as a base for developing electric cars. The case of Australia is discussed. GM, which produced Elizabeth plant in Australia and produced and sold Cruz as a Holden brand, announced in 2017 that it would shut down its plant in 2017 after government support was cut even in the end of business. GM Holden and the Australian government helped more than 1,600 employees find new jobs and sought factory sales. A Belgian businessman in 2015 tried to take over the plant because he would continue to produce cars with the existing platform, but it was dismissed because it was unlikely to regenerate. However, things changed in January this year when the GFG Alliance, which was led by British steel company Liberty House, took over the factory and made an attempt to make it an electric car production base. The Australian government has asked GM to cooperate with the GFG proposal.
Also, the Korean government is also expected to consider selling the Gunsan plant to a third party and using it as a new industry base, but the issue of the succession of about 2,000 employees at GM Korea`s Gunsan plant is expected to become a hot issue.
By Ye Jin Soo jinye@
[ copyright ⓒ The Digitaltimes ]
According to the automobile industry on February 25, the sale of a package including existing workers is being discussed with a third party sale method of GM-Gunsan plant in Korea centering on the government and local economic circles.
The government is considering whether it will be able to apply the `Hose Equation Solution`, which will be converted to an electric vehicle factory after the sale of a third party to the Gunsan plant, to the domestic market. Barry Engel, president of GM Overseas Business (GMI), said on August 20 that he will visit the National Assembly to discuss the possibility of selling third parties at a meeting with lawmakers.
In the financial investment industry, Shanghai GM, which owns 6.02% of Korea GM`s three largest shareholders, is expected to take over the plant. Shanghai has recently strengthened cooperation with GM in research and development, and last year acquired GM`s India Halol plant. However, Kim Pil-soo, a professor at the Department of Automotive Engineering at Daelim University, said, "I think that the possibility of the takeover is low because Shanghai car was caught up in the controversy over the ship during the Ssangyong accident."
Meanwhile, the acquisition price issue is also a variable. It is a common view among experts that the process of selling third parties is very difficult due to the problem of succession to employment and the huge acquisition cost. An industry representative said, "The value of the Gunsan plant can be maintained when manpower, automobile production facilities and land are in tandem, and when the facilities and land are separated and sold, the value is significantly lower. GM`s headquarters has pointed out that the high-wage and low-efficiency problems of the Gunsan plant are also a stumbling block. "The Gunsan factory is the most recently built factory in Korea with relatively new facilities. The acquisition cost is expected to be high, as it has facilities capable of producing 300,000 units annually.
A specialist from the securities industry stated, "Samsung Motors, with KRW 3 trillion invested, sold for KRW 300 billion, which is one tenth of the price of Renault, but it will be difficult to sell such a low price now.”It is a question of whether or not it will be the actual buyer."
Some electric vehicle manufacturers are suggesting to the government that the Gunsan factory site should be replaced with a new industrial complex and ultimately should be used as a base for developing electric cars. The case of Australia is discussed. GM, which produced Elizabeth plant in Australia and produced and sold Cruz as a Holden brand, announced in 2017 that it would shut down its plant in 2017 after government support was cut even in the end of business. GM Holden and the Australian government helped more than 1,600 employees find new jobs and sought factory sales. A Belgian businessman in 2015 tried to take over the plant because he would continue to produce cars with the existing platform, but it was dismissed because it was unlikely to regenerate. However, things changed in January this year when the GFG Alliance, which was led by British steel company Liberty House, took over the factory and made an attempt to make it an electric car production base. The Australian government has asked GM to cooperate with the GFG proposal.
Also, the Korean government is also expected to consider selling the Gunsan plant to a third party and using it as a new industry base, but the issue of the succession of about 2,000 employees at GM Korea`s Gunsan plant is expected to become a hot issue.
By Ye Jin Soo jinye@