General Motors said it will close one of its four plants in South Korea and incur an $850 million impairment charge as part of a restructuring of its money-losing business in Asia’s fourth-biggest economy.
The U.S. automaker said it would decide the future of its remaining South Korean operations within weeks, amid ongoing talks with the government and labor unions on how to cut costs and make the business profitable.
“Time is short and everyone must move with urgency,” GM President Dan Ammann told Reuters.
The move is the latest in a series of steps the U.S. automaker has taken to put profitability and innovation ahead of sales and volume. Since 2015 GM has exited unprofitable markets including Europe, Australia, South Africa and Russia.
GM would take charges against profits of $850 million to reflect the South Korean restructuring costs, including $375 million in cash related to employee expenses, the company said in a statement. Most of the financial writedowns would be recorded by the end of the second quarter.
South Korea had for years been a low-cost export hub for GM, producing close to a fifth of its global output at its peak. But sharp rises in labor costs, weakening demand for sedans, which GM Korea mainly produces, and big investments in neighboring China hurt the South Korean business’s competitiveness.
The plant shutdown is part of its broader Asia business restructuring.
Excluding profits from China, GM said its Asian operations lost money in 2016.
GM Korea posted a total of 1.9 trillion won ($1.8 billion) in net losses between 2014 and 2016.
In recent years, GM ceased manufacturing in Australia and Indonesia, and significantly restructured its Thai operations. It is also winding down efforts to sell cars in India and is turning its manufacturing facilities there into an export hub.
The automaker’s decisions to exit other unprofitable markets have exacerbated problems for GM Korea, which used to build many of the Chevrolet models GM once offered in Europe. Declining sales of small cars in the United States have also hurt demand for Korean-made Chevrolets.