Gov't mulls support for GM Daewoo parts suppliers

By Lee Joon-seung
SEOUL, Jan. 14 (Yonhap) -- The government may move to help struggling parts
suppliers of GM Daewoo Auto & Technology if a global economic downturn continues
to hurt production, the commerce ministry said Wednesday.

GM Daewoo, majority-owned by U.S. automaker General Motors Corp., was forced to
temporarily halt operations in December, dealing a blow to its contractors. Its
2008 vehicle output dropped 13.8 percent on-year to 813,000 units.
"The government may step in due to serious difficulties facing General Motors
though GM Daewoo is not suffering a liquidity crunch at present," the Ministry of
Knowledge Economy said.
According to the ministry, GM Daewoo has 322 parts suppliers whose combined sales
reach 8.4 trillion won (US$6.2 billion).
"The company maintains a credit line with state-run Korea Development Bank and
three other banks that were set up in 2002 and this ensures access to funds," the
ministry said.
It added GM Daewoo remains competitive in the face of the global downturn because
the carmaker's lineup centers on fuel efficient, affordable and small-sized cars.
A contingency plan is needed since a reduction in production could severely hurt
parts suppliers that are usually small and medium-size enterprises with limited
cash reserves, the ministry said.
The ministry, however, stressed any support would be in the form of research and
development (R&D) funds and measures aimed at improving the competitiveness of
the entire industry.
Direct assistance, including cash injections, are banned under World Trade
Organization rules and could trigger trade disputes down the line.
yonngong@yna.co.kr
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