GM Korea to Shutter One of Four Factories

General Motors Co. says it will shut down its assembly plant in Gunsan, South Korea, by the end of May.

The facility, which makes Chevrolet Cruze compact sedans and Orlando compact MPVs, has been operating at 20% of capacity, according to GM. The facility employs about 2,000 workers.

Last week GM CEO Mary Barra told analysts the company needed to take action to turn GM Korea into a “viable” business. Yesterday the carmaker described the Gunsan closure as a “first step in a holistic plan” to revive the unit, which it says has sustained “significant” losses for several years.

GM Korea was formed in 2002 as GM Daewoo when the U.S. carmaker acquired the assets of bankrupt Daewoo Motor Co. The facilities included four assembly plants, four powertrain factories and a product development center.

The business served as a global hub for GM’s small-car development and production, supporting the Chevrolet brand in Europe, earlier in the current decade. But orders shrank when GM phased out the Chevy brand in Europe four years ago. More recently GM has complained that labor costs in Korea have grown sharply.