Decision on Daewoo ETA plant hangs in balance

Rupali Mukherjee

New Delhi, Sept 20: The new management of Daewoo Motors of Korea — General Motors (GM) — is expected to take a decision on the future of Daewoo Motors India Ltd’s (DMIL) engine, transmission and axle (ETA) plant which was formally shut down on Wednesday.

The earlier management of DMIL, led by managing director and CEO YC Kim, had planned to spin off the plant either as a joint venture, or divest it completely by September. The company had appointed a European consultant for doing due diligence of the plant. However, when Young-Tae Cho took over as managing director and CEO, the spin-off plans were dropped. It is understood that an announcement regarding GM’s takeover of Daewoo Korea is likely to be announced by Friday afternoon. Korean newspaper reports suggest that GM would purchase Daewoo Motor’s overseas plants and new factories in Kunsan and Changwon, but not the largest and most antiquated plant in Pupyong. GM is instead agreeing to sell Daewoo Motor cars produced at the Pupyong plant for six years, the reports said.

DMIL managing director and CEO Young-Tae Cho is at present in Korea. However, Daewoo Motor unions have issued a statement strongly opposing the GM accord. It said, “The deal is aimed at phasing out the Pupyong plant in a few years. We believe there will be another round of restructuring.” Earlier, no decision could be taken on the ETA plant as the workers union did not agree to the separation package offered by the company. DMIL said that it had closed its idle ETA unit and signed a separation agreement with the union.