GM Could Move Production Out of Korea

GM CEO Dan Akerson said in a media interview on Thursday that he would consider shifting production facilities in South Korea to another location if tensions worsen on the Korean Peninsula.

Speaking with CNBC's "Squawk Box," Akerson said, "We are making contingency plans for the safety of our employees to the extent we can." He added, "Beyond that it's difficult to shift production." When pressed further by the host of the program whether GM would consider shifting production facilities from South Korea if the situation worsens, Akerson said, "I think that's fair. You've got to start to think about where you have the continuity, the supply and safety of your assets and your employees. It's a concern to everybody."

Akerson was speaking about the overall situation facing the U.S. auto industry, including forecasts and the impact of the weak Japanese yen. The potential threat from North Korea was just one of the many topics that were discussed.

GM operates five production plants in South Korea. They produced 2.07 million vehicles last year, including 800,000 finished automobiles and 1.27 million in complete knock-down-kit form to be reassembled later. A total of 145,000 vehicles were sold here and 1.93 million were exported to the U.S., Europe and other parts of the world. GM Korea employs 17,000 workers and has the highest ratio of exports compared to total production among all GM factories around the world.

Some industry experts say Akerson's comments could be part of steps the automaker is taking to gradually shift its production facilities out of South Korea over the mid to long term.

GM has voiced concerns over the strengthening won, which makes it more expensive to produce vehicles here. Sergio Rocha, head of GM Korea, said in an interview with the Financial Times late last month that the South Korean government must come up with measures to support exporters which are losing competitiveness due to the strengthening won.

GM recently announced plans to invest W8 trillion (US$1=W1,132) in Korea over the next five years. But industry experts point to GM's plans in other parts of Asia. GM announced that it will double its production in China to five million cars by 2015, said a researcher at the Korea Institute for Industrial Economics and Trade. "This raises concerns that GM may be seeking to shrink production in Korea."

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