Hankook Opts for Hungary

Hankook Tire Co said yesterday it will build a 500 million euro manufacturing plant in Dunaujvaros, Hungary, 68 kilometres south of Budapest. The European plant is expected to begin tyre production in the second half of 2007, the Korea Herald has reported. Te news comes following the collapse of a similar deal with Slovakia, which fell apart because of disagreements about government subsidies.

Before the Hungarian deal was finalised, local news sources had described the Hungary incentive package offered to Hankook Tire Co as a state secret. However, the reports said incentives include direct and indirect subsidies, tax breaks, training opportunities and infrastructure, amounts to no more than about 10 per cent of the total investment value.

Hankook said it aims to become the world’s fifth largest tyre maker by 2008 as its annual global production is expected to reach 70 million tyres with including production from the new factory. Last year the Korean tyre manufacturer’s European sales totalled at roughly £180 million, about 37 per cent of its total sales. This year the company is said to be aiming for sales of £225 million.

When Hankook’s new facility is running at full capacity in 2010, the Hungarian factory will be capable of producing 10 million tyres each year, Hankook said. The new facility will employ 1500 people.

Hungarian government officials including the Minister of Economic Affairs Janos Koka visited Hankook’s headquarters in Seoul yesterday to sign the agreement on the investment. Hankook currently produces more than 58 million tyres annually from its four factories in Korea and China.