Kumho Tire feared to delay push for European plant

A worker disassembles a structure from Kumho Tire's fire-hit production line in the southwestern city of Gwangju, Aug. 11. The facility was burnt down following a devastating fire in May. Yonhap

Kumho Tire’s plan to build a manufacturing facility in Europe seems to be losing momentum after the tiremaker’s management effectively conceded to its union in their latest factory relocation agreement.

The tire firm had long wanted to establish the new production line in one of three countries — Poland, Serbia or Portugal — so it can turn the facility into a major hub for distribution across Europe amid growing regional demand.

The plan, however, hit a temporary snag after the firm’s management recently reached a long-awaited agreement with its union over the relocation of its Gwangju plant in the southwestern city to Hampyeong, South Jeolla Province, following a fire that destroyed much of the original factory.

Kumho Tire’s management initially sought to have the relocated Hampyeong factory produce up to 3 million tires each year, in an apparent move to push for a dual expansion into Europe with the proposed European plant.

At that time, the union expressed strong opposition, fearing job losses due to the new overseas production line. Union workers urged the management to guarantee that the relocated domestic plant’s annual manufacturing capacity reaches 6 million.

After months of discord, both sides reached a final agreement last month, under which the relocated plant will handle production for some 5.3 million tires each year, starting in 2028.

The figure was widely seen by many as management’s concession to the union. Management also agreed to resume one tire production line in Gwangju by the end of this year with a daily capacity of 6,000 units.

This may delay the company’s planned expansion into Europe, as it requires significant capital from Kumho Tire to realize their promise with the union, according to industry officials.

“Kumho Tire needs to make a huge investment for the establishment of the new factory in Europe, but the problem is how to source capital at a time when it has to fulfill the pledge for the domestic production relocation, which also requires at least some one trillion won ($719.4 million),” a tire industry official said.