[Exclusive] Korea GM Bupyeong 1 Plant to Operate Only 7 Days in May

Bupyeong Factory Faces Unavoidable Shutdown Due to Southeast Asian Parts Supply Disruptions
Domestic Auto Industry Experiences Consecutive May Shutdowns Amid COVID-19 Impact

Chevrolet Trailblazer RS (Photo by Korea GM)

[Asia Economy Reporter Kim Ji-hee] Korea GM has set a production plan to operate the Bupyeong 1 plant for only 7 days throughout May. This is due to a decrease in export volumes caused by the global spread of the novel coronavirus (COVID-19) and problems in the supply of parts imported from Southeast Asia.

According to industry sources on the 29th, Korea GM decided on the factory operation plan for May and will run the Bupyeong 1 plant for a total of only 7 days next month. First, during the first week of next month, the plant will remain closed until May 6, extending the Golden Holiday period until May 5, and will operate the production line on the 7th and 8th. Afterwards, the plant will operate for two or three days each week and then enter a temporary shutdown for one week starting from the 25th. Initially, Korea GM considered several options, including a two-week shutdown in early May and operating three days a week throughout May, but the shutdown period has been extended more than expected.

Korea GM had been operating the plant normally until this month, but the depletion of some parts inventory imported from overseas made the shutdown next month inevitable. In particular, it is known that there are difficulties in procuring wiring parts supplied from the Cebu plant in the Philippines. The Philippines has imposed a lockdown order until mid-May to prevent the spread of COVID-19. Additionally, since last month, economic activities in export countries such as the United States, a major automobile market, have virtually stopped, creating a need to adjust export volume production.

This is the second time since February that Korea GM's plant has stopped due to the impact of COVID-19. The Bupyeong 1 plant temporarily shut down for two days on February 17-18 due to the depletion of some parts inventory, including Chinese-made wiring harnesses. The Bupyeong 1 plant produces the Trailblazer, which Korea GM introduced to the domestic market earlier this year. Since the Trailblazer is responsible for supply volumes not only domestically but also worldwide, mainly to the United States, the export ratio is high.

On the other hand, the other plants operated by Korea GM in Korea, the Changwon plant and Bupyeong 2 plant, are operating normally. These plants have a lower export ratio compared to Bupyeong 1 and currently do not face significant parts supply issues. In fact, the Bupyeong 2 plant has planned weekend overtime work next month.

A Korea GM official said, "There are some disruptions in parts supply from Southeast Asia, and we are currently preparing countermeasures such as securing alternative sources," adding, "We are updating parts status and inventory situations regularly and setting production plans on a weekly basis."

The shockwave of COVID-19 spread is becoming more pronounced in May. Not only Korea GM but also most domestic automobile companies such as Hyundai Motor, Kia Motors, and Renault Samsung Motors are consecutively stopping their production lines. Hyundai Motor, which decided to halt operations at Ulsan Plant 5 from May 13-17 and Ulsan Plant 4 from May 27-29, will stop Ulsan Plant 3 from June 6-8. Kia Motors will shut down the Sohari plant from May 27 to June 8 and the Gwangju Plant 2 until June 9. The industry is actively utilizing the Golden Holiday period in early May to implement shutdowns as inventory adjustments are necessary due to decreased exports.

As finished car manufacturers enter a chain of shutdowns, the impact on the automobile parts industry is expected to grow. According to a survey conducted by the Korea Automobile Manufacturers Association targeting 96 domestic parts companies, half of the respondents reported a sales decrease of more than 20% in the first quarter of this year due to the impact of COVID-19. As of March, 35% of parts companies had a factory operation rate below 70%. Consequently, most automobile parts companies are facing liquidity difficulties due to sales losses.

This content was produced with the assistance of AI translation services.