Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Kumho Tire reaches long-delayed deal on factory relocation
Kim Myung-sun, left, vice president in charge of production technology at Kumho Tire, poses with Hwang Yong-pil, head of the firm's labor union, at the firm's factory in the southwestern city of Gwangju, Wednesday. Courtesy of Kumho Tire
By Lee Min-hyung
Company reports earnings surprise despite production suspension
Kumho Tire reached a long-delayed agreement with its labor union on a factory relocation plan Wednesday, clearing a major hurdle for the company’s planned expansion into Europe, the tiremaker said.
This ended the months-long stalemate between Kumho Tire’s management and its union over the relocation of its now-suspended plant in the southwestern city of Gwangju to Hampyeong, South Jeolla Province. Operations at the Gwangju plant have been suspended since a devastating fire in May destroyed one of its production lines.
According to the latest agreement, Kumho Tire’s relocated plant will produce some 5.3 million tires each year starting in 2028. The management also said it will resume tire production at the factory in Gwangju by the end of this year, with a daily capacity of 6,000 tires.
“Regardless of the factory relocation, we will also ensure employment for existing workers,” a Kumho official said. “Kumho Tire promises to contribute more to the regional community until we complete the factory relocation.”
The settlement is expected to pave the way for Kumho Tire to solidify its plan to build a new production line in Europe.
Up until recently, the firm’s unionized workers declined to accept the management’s initial proposal to make the Hampyeong plant’s annual capacity reach some 3 million, for fear of losing jobs. The union demanded that the management guarantee a capacity of over 6 million amid concerns that management will gradually reduce local production capacity in favor of its new plant in Europe.
With the uncertainties surrounding the union backlash eliminated, Kumho Tire is widely expected to speed up its investment in Europe.
Kumho Tire's unionized workers stage a protest in front of its now-suspended production line in Gwangju, July 11. One of the plant's major production lines burned down in May due to fire. Yonhap
In April, Kumho Tire CEO Jung Il-taik reaffirmed the company’s willingness to build the new European plant, possibly in Poland, Serbia or Portugal, as Europe’s strategic importance for tire firms grows rapidly amid solid sales of value-added tires used for eco-friendly vehicles. Europe accounted for more than a quarter of Kumho Tire’s total sales last year.
Kumho Tire will spend an estimated 800 billion won ($580 million) to 900 billion won for the initial investment for the new factory in Europe, with an annual production capacity of some 6 million tires.
On the same day, the tire firm surprised the market with robust earnings despite the recent factory fire. The fire, which erupted May 17 at the Gwangju plant, left its operation suspended for more than two months, sparking concerns over a possible earnings fall.
According to a regulatory filing, however, Kumho Tire reported an operating profit of 175.2 billion won in the second quarter, up 15.6 percent from the previous year. Its sales also increased 7.9 percent to 1.22 trillion won during the same period.
“We will solidify our global presence and do the utmost for a major leap forward, particularly in the market for value-added tires,” a company official said.