GM’s S.Korea unit suspends production at two factories over procurement issues

The brand of GM Korea is seen at an its plant in Incheon, South Korea, Might 14, 2018. REUTERS/Kim Hong-Ji

SEOUL, July 20 (Reuters) – Common Motors Co’s South Korea unit (GM.N) has suspended manufacturing at its two factories within the nation following a neighborhood provider’s refusal to produce auto elements, an official at GM Korea instructed Reuters on Wednesday.

U.S. automaker’s Korea unit was suspending manufacturing of all autos at its Changwon and No. 2 Bupyeong crops since final week after a neighborhood provider, which demanded a worth hike for its merchandise, refused to produce elements.

South Korean autoparts maker ERAE AMS, which makes auto elements, reminiscent of automotive turbines, calipers and brake elements, refused to produce elements, calls for a worth improve for its elements equipped to GM Korea’s factories.

“GM Korea plans to proceed having discussions with ERAE AMS to resolve the problems,” GM Korea mentioned in a press release.

ERAE AMS was not instantly obtainable for remark when contacted by Reuters.

ERAE AMS has manufacturing websites in South Korea, China and United States and provides to main automakers, together with Volkswagen AG (VOWG_p.DE), Hyundai Motor Co (005380.KS) and BYD amongst others, in accordance with the corporate web site.

GM Korea’s Changwon and No. 2 Bupyeong crops have a mixed annual manufacturing capability of about 70,000 autos, accounted for about 30% of GM Korea’s complete annual manufacturing capability final yr, knowledge from the Korea Car Producers Affiliation confirmed.

The manufacturing at No. 1 Bupyeong plant, which makes Trailblazer sport-utility car (SUV), has not been affected, in accordance with GM Korea.

Manufacturing halts at GM Korea’s factories comes after GM Korea President Roberto Rempel introduced the corporate’s goal to show a revenue subsequent yr, whereas it goals to hit break-even this yr.

GM Korea reported eight consecutive losses since 2014, in accordance with its regulatory filings.

Reporting by Heekyong Yang, Modifying by Louise Heavens

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