Kumho may reduce production in Korea

Employees of the Kumho plant in Gwangju, South Korea, held a protest rally in front of the enterprise, which was seriously damaged by a major fire, against the alleged plans of the management to reduce production in the country. On July 17, a similar rally is planned in front of the Kumho office in Seoul, reports the Korea Herald.

"We have learned that Doublestar, the largest shareholder of Kumho Tire, based in China, plans to build a new plant in Korea with a capacity of 3.5 million tires per year, which is less than the enterprise in Gwangju, as well as accelerate the implementation of a project to build a new plant in Europe with a capacity of 6 million tires," the union says. "We started negotiations on this issue on June 30 and expressed our protest, but there are no signs that the company is going to change its plans."

The fire at the Kumho plant started on May 17 and lasted for 76 hours, and the company has not yet presented a plan for the restoration of production. So far, both the damaged and undamaged production facilities are not working. For this reason, there were rumors that production could be transferred to Hampyeong (South Jeolla Province) or abroad.

Currently, Kumho is considering the possibility of building its first plant in Europe to strengthen its presence in the region, which accounts for about 25% of its turnover. Options for launching production in Poland, Serbia, and Portugal are possible, and planning began even before the fire in Korea.

The union demands that Kumho first restore production in Gwangju with the initial capacity of 12 million tires and only then proceed with the construction of a plant abroad. The company notes that no decisions have been made yet regarding the possible transfer of production.

"The roadmap for the restoration of production is being discussed with the union and is expected to be announced in July, when it is formed," Kumho says.

The media note that since there are still disagreements between the management and the union regarding the plan, it is expected that its announcement will be postponed again, which may further slow down the process of restoring the plant.

According to Daishin Securities, the Gwangju plant accounts for 20% of Kumho's total production, and its shutdown will affect the company's results starting from the second half of 2025, as product stocks will be depleted.

Photo: Yonhap