By Colum Murphy and Jeff Bennett
General Motors Co. said Thursday it will shut its Indonesia
assembly plant and cut 500 jobs in one of the boldest moves yet by
the auto maker to revamp its struggling international
operations.
The Bekasi plant, opened in 1995 outside the capital of Jakarta,
will close by the end of June as higher material costs and limited
access to local parts suppliers continues to increase expenses. The
plant produced the seven-seat 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, which
had sat idle from 2005 through 2013.
"GM Indonesia is undergoing a market-driven transformation," GM
international chief Stefan Jacoby said. "We know this decision is
disappointing for our hardworking employees in Indonesia. We will
work with our teams and the local community, along with the
Indonesian government, to support our people."
Mr. Jacoby, brought in from Volvo in 2013, 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.
Months after Jacoby stepped into the new position, GM decided it
would pull the plug on its Australia operations citing the higher
costs to build and sell cars in that country. Production is slated
to cease there in 2017.
Strong importing efforts from GM's Japanese competitors have
allowed those companies to save money without damaging their hold
on market share in a variety of market. GM's international
operating profit for 2014 was relatively flat with the prior year
at $1.22 billion.
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.
Meanwhile, GM is still working on a plan to team with its
Chinese partner, SAIC Motor Corp., to build and sell low-cost
minivans in Indonesia. A newer more modern plant would be built
near Jakarta, but the plant would be smaller and costs split
between the two companies making production much more cost
effective for GM. The plant would also make vehicles for other
selected Asian markets.
Michael Dunne, president of GM Indonesia, will leave the company
at the end this month to start his own business. Mr. Dunne couldn't
immediately be reached for comment Thursday. GM Indonesia Chief
Financial Officer Pranav Bhatt will serve as interim president
until the permanent replacement is named.
Write to Colum Murphy at colum.murphy@wsj.com and Jeff Bennett
at jeff.bennett@wsj.com
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