General Motors Company
) decision to pull out its Chevrolet brand from Europe will
adversely affect its employees in South Korea. As per Reuters,
the automaker is planning to offer a voluntary retirement scheme
to 6,000 salaried workers in the country from Mar 2014, to reduce
The decision is the direct result of General Motors' strategy
related to Europe, as most of the Chevrolet cars sold in Western
and Eastern Europe are manufactured in South Korea. Thus, the
move is expected to lower the production in South Korea by almost
20% by 2015.
This necessitated a staff reduction for improving operation
efficiency. While the number of job cuts planned has not been
disclosed, General Motors revealed that it will not cut
production jobs. The voluntary retirement scheme is open to
almost 2,200 research and design personnel, among others. This is
the fourth round of staff reduction by General Motors since
The research and development center of GM Korea is currently
working on the development of the next-generation Spark mini-car,
which is scheduled to launch in 2015. Once the development of the
car is competed in Mar 2014, the center will not have any other
projects to work on.
General Motors presently manufactures about one-fifth of its
cars in South Korea, mostly for export. However, rising labor
costs, trouble with labor unions and strengthening of the South
Korean Won is affecting the company's efficiency in the region.
Labor strikes in the nation in July resulted in production losses
of over $90 million, forcing General Motors to reach a wage
settlement, including yearly bonuses of 10 million Won ($9,000
million) per member.
Consequently, earlier this year, there were media reports
suggesting that the automaker will gradually move out of South
Korea. While the accuracy of these reports remains to be seen,
the voluntary retirement scheme will come as a blow to General
Motors' South Korean workforce.
General Motors currently carries a Zacks Rank #3 (Hold).
Better-ranked major automobile stocks worth considering are
Tata Motors Limited
Ford Motor Co.
Honda Motor Co., Ltd.
). All these stocks hold a Zacks Rank #2 (Buy).
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
HONDA MOTOR (HMC): Free Stock Analysis Report
TATA MOTORS-ADR (TTM): Free Stock Analysis
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