GM Korea to slash Trailblazer output on COVID-19

By Nam Hyun-woo

GM Korea will be suspending its production of the Trailblazer SUV throughout this month, as the COVID-19 outbreak is hurting its exports to the U.S. as well as disrupting parts supplies, according to industry officials, Tuesday.

The Trailblazer is a model with a strategic importance for General Motors' South Korean unit, because the compact SUV is a global export model necessary for the company's mid- to long-term survival and stands as General Motors' promise to use Korea as a manufacturing base in return for a $750 million government aid injection in 2018.

GM Korea temporarily stopped operation of its Bupyeong plant No.1 in Incheon, Monday, and is expecting to experience more “temporary production stops” throughout the rest of this month.

“The Bupyeong plant No.1 had a temporary production stop Monday and we expect further disruptions from issues relating to the procurement of certain parts,” a GM Korea spokeswoman said. “We expect some temporary production stops in May but this is subject to change.”

The spokeswoman did not say how the temporary shutdowns will affect vehicle output, but added the plant was changing its production plan on a “daily basis” because of increasing uncertainties stemming from the COVID-19 pandemic.

A ranking official at GM Korea's union also said noted that there would be temporary production halts at the Bupyeong plant No.1, but said he had yet to receive a fixed production schedule from management regarding this.

“The company normally reports production schedules on a weekly basis, so it is difficult to expect how many days will be affected at this point,” the official told The Korea Times.

According to the official, employees will receive 80 percent of their average wage if the shutdown period is longer than 11 business days, but this will decline to 70 percent if the shutdown ends within 11 business days.

To save costs, the plant is anticipated to have temporary production stops on 11 days. Reuters also reported that the plant will be idle for 11 business days, citing a production plan that came into its possession.

GM Korea is supplied with wiring harnesses from the Philippines, and measures by the government there have disrupted the supply of these. Other Korean carmakers including Hyundai Motor and Kia Motors also import wiring harnesses from Southeast Asian countries and China, and have experienced temporary production stops due to the coronavirus pandemic.

Problems in export markets have also contributed to the production stops. The Trailblazer debuted in the Korean market in January, and the Bupyeong plant No.1 was to produce up to 200,000 this year and ship at least 160,000 of them to the U.S.

GM Korea has already exported more than 32,362 Trailblazers to overseas destinations, with more than 90 percent of them heading to the U.S.

The official debut of the Trailblazer was supposed to have been in April, but GM Korea saw this plan disrupted as vehicle sales were placed under lockdown due to the U.S. government's virus response.

This dealt a blow to GM Korea, 80 percent of whose sales come from exports. Due to this sales structure, GM Korea CEO Kaher Kazem said the Trailblazer “represents more than just a new product” and is “a milestone in GM Korea's journey.”