Daily Management Review

Weakened Overseas Supply Forces Sharp Output Reduction


General Motors planned on a “seven business days” operation model to cope with shrinking exports.

Source: flickr.com; (CC BY-ND 2.0)
Source: flickr.com; (CC BY-ND 2.0)
This month, General Motors has planned to make a sharp reduction in the output for its unit in South Korea which produces the company’s “new Trailblazer sport-utility vehicle”. The decision has been taken due to the outbreak of coronavirus which has disrupted partial supply chain besides the U.S. exports has also taken a beating due to the same.
The Korean plant of GM supplies certain “small SUVs” of the company to the U.S. market catering to the shifting trend of customers from its sedans. The entire auto industry is having to cope with shrinking exports as countries are restricting movement across borders to slow down the spread of COVID-19. The decision was taken to run the BP1 plant, located near Seoul, for “seven business days” while stopping operation for the remaining eleven days this month.
Earlier, a spokesperson had informed that GM had suspended its operation in the said unit until the 5th of this month, as the virus impact was felt in some “procurement and U.S. sales” operations. The Trailblazer production had commenced in January 2020 which were being shipped to the U.S. from February 2020. However, the sales process hadn’t yet started, as result the said model has only hit the South Korean market.
Due to the government’s action in Philippines against the spread of the ongoing pandemic which has been in place from the middle of March, the “wiring harnesses” supply for the Korean plant of GM has got disrupted as the country was among the first ones with the earliest record of the infection after it appeared on a global scale.
Export is the backbone of South Korea’s economy which had shown the sign of containing the outbreak of the pandemic. Therefore, manufacturing within the country had been allowed but the dwindling overseas supply and demand poses a hurdle. In April, export figures for South Korea slumped by “24.3%” in comparison to its respective last year’s figures.