Hankook, Kumho, Nexen hit hard by truckers' strike

Containers loaded with tires are piled up at the distribution center of Hankook Tire's Daejeon Plant, on Dec. 4. Yonhap

By Kim Hyun-bin

Korean tire companies' have seen output heavily impacted by the ongoing truckers' strike, according to company officials Thursday. Some have even begun transferring supplies from local factories to overseas production sites to cope with the logistics nightmare. Automakers are also increasingly concerned about production disruptions if the strike continues for a few more weeks.

The scale of damage to the three domestic tire makers ― Kumho Tire, Hankook Tire, and Nexen Tire - is increasing. Kumho Tire started to cut production at its plants in Gwangju and Gokseong, while product shipments were suspended due to the strike.

Since Dec. 1, daily production was already reduced to 30 percent of normal levels. But as the situation showed no signs of being resolved, daily production was lowered even further to 70 percent. As a result, the daily production of the Gwangju plant decreased from 33,000 to 8,000 tires. The Gokseong factory also saw daily production fall from 32,000 to 10,000 tires.

Kumho Tire shipped an average of 90,000 tires per day from its three plants, including one in Pyeongtaek. But shipments have decreased by 10 percent. The company explains that although it is stocking up on finished products inside the factory, it has no choice but to start reducing production because the storage spaces are filled.

“Our clients have around two months of tires in reserves so they are holding on, but if the strike is prolonged more than their reserves can hold, we could see a major catastrophe,” a Kumho Tire official said.

In addition, there have been setbacks in the shipments of exports, and overall sales began to take a hit. Nexen Tire is also having difficulties shipping products from its Yangsan and Chagnyeong factories whose products are unable to be transported to Busan New Port due to the strike.

Hankook Tire is experiencing a wage dispute with its union. Around 2,000 union members suspended work for eight hours and threatened to strike for another six hours on Dec. 8 and Dec. 10.

The union's main demand is to increase the base salary by 0.6 percent more than the amount agreed upon with another group of laborers and to pay an additional 2 million won in incentives.

Hankook Tire suffered losses of over 50 billion won due to the ongoing strike. In order to prevent further production disruptions, the company's management temporarily transferred some of the production from the Geumsan plant to a Chinese plant, and is known to be considering a plan to reduce domestic production next year.