Executive Briefings

Lost in Translation? GM Plant Shutdown Shocks South Korea

Only weeks into a new job heading General Motors Co's international operations, Barry Engle flew into a frigid South Korea in January and held a series of meetings with government officials to discuss the future of GM's loss-making local unit.

In what they thought were meet-and-greet introductions, senior officials agreed to work with the global automaker on problems at GM Korea, according to South Korean officials with direct knowledge of the meetings.

This month, Engle made another visit, meeting with the head of state-run Korea Development Bank, which owns 17 percent of GM Korea. Bank and government officials said Engle asked for financial support and in return, KDB suggested an audit before it would consider committing any fresh funding.

South Korea officials said they left reassured they were making progress working through issues, albeit slowly.

Then came the bombshell. Last week, GM announced it would shut its Gunsan plant, which employs 2,000, and decide the future of the remaining three other Korean plants within weeks.

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In what they thought were meet-and-greet introductions, senior officials agreed to work with the global automaker on problems at GM Korea, according to South Korean officials with direct knowledge of the meetings.

This month, Engle made another visit, meeting with the head of state-run Korea Development Bank, which owns 17 percent of GM Korea. Bank and government officials said Engle asked for financial support and in return, KDB suggested an audit before it would consider committing any fresh funding.

South Korea officials said they left reassured they were making progress working through issues, albeit slowly.

Then came the bombshell. Last week, GM announced it would shut its Gunsan plant, which employs 2,000, and decide the future of the remaining three other Korean plants within weeks.

Read full article