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Asia Today ISSN 1861-4604 Wednesday, August 15, 2018

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General Motors to shut Indonesian assembly plant in June

GM Southeast Asia operations

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NEW YORK - Largest US carmaker, General Motors Co. Thursday announced plans to close its assembly plant in Indonesia, leading to loss of 500 jobs in a major move to restructure its struggling international operations.

Attributing the decision to high material costs and limited supplies of motor parts locally, the Detroit automaker in a statement said it will close the plant in Bekasi, outside the capital of Jakarta, by the end of June. Originally started in 1995, the plant has had a chequered operation. It was closed between 2005-2013, when it was restarted with the infusion of $150 million investment. .

"We know this decision is disappointing for our hardworking employees in Indonesia," Tim Zimmerman, president of GM Southeast Asia operations, said in a statement.

"We will work with our teams and the local community, along with the Indonesian government, to support our people."

The Indonesian plant produces the seven-seat multipurpose vehicle Chevrolet Spin, which GM had hoped would be a success in the local market. The Spin never generated the type of sustainable sales GM needed to operate the plant profitably.

"GM Indonesia is undergoing a market-driven transformation," said GM international chief Stefan Jacoby, who has been critical of the auto maker's patchwork of production sites which have failed to change through the years in response to market demands and costs.

"This transformation will strengthen the business and dealer network by focusing on building the Chevrolet brand and delivering a competitive, high-quality portfolio to meet the needs of customers in Indonesia."

The company plans to continue supply of vehicles ranging from Chevy Aveo, Spin, Spin Activ, Orlando, Captiva, Colorado and Trailblazer, to Indonesia, where last year it witnessed a big dip in sales from 14,971 in 2013 to 10,758 vehicles.

GM will maintain its presence in the region by selling Chevrolet vehicles through its dealer network. The Chevrolet Orlando will continue to be imported from South Korea, while the Trailblazer and Captiva are built in Thailand.

GM is also in talks with its Chinese partner, SAIC Motor Corp., to build and sell low-cost minivans in Indonesia.

A newer more modern plant is proposed near Jakarta. But it would be on a much smaller scale with the costs to be split between the two companies, making production much more cost effective for GM. The plant would also make vehicles for other selected Asian markets.

Despite its long presence in the region, the U.S. auto giant has not been able to establish a strong presence mainly due to tough competition from dominant Japanese rivals led by Toyota Motor.

Since Jacoby took charge in 2013, GM has announced plans to shut down its Australian manufacturing operations, citing the higher costs to build and sell cars in that country. Production is slated to cease there in 2017.

GM's international operating profit at $1.22 billion for 2014 was relatively flat compared with the previous year.

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