Kumho’s Kim to Dealers: “We are Here to Stay”

The sandbags outside one of the lobbies to the hotel served as an oddly timed metaphor for the 2010 Kumho Tire USA Dealer Meeting last week in Desert Palms, California, Tire Review reports. An unrelenting rain that caused floods across much of Southern California had pounded the area for a week. Its parent company in financial turmoil, Kumho Tire USA has been flooded by a rising tide of questions from media, dealers and suppliers, and the company used the meeting to address its future.

Riddled with heavy debt from the economic meltdown, Kumho Asiana Group – Kumho Tire Co.’s parent – is undergoing a financial make-over to reduce its debt load and stabilizs the company. Part of that involves a debt “work-out” programme for cash-strapped Kumho Tire that should be sorted out in February. JH Kim, president and CEO of Kumho Tire Co., travelled to the dealer meeting specifically to meet with Kumho dealers and explain the situation and assure them of the future of the company in the face of these difficulties.

“As you know, we have experienced some very unprecedented challenges in 2009, and the year coming up will no doubt bring new problems and uncertainties,” Kim said. “Kumho Tire has certainly not been immune from tough circumstances throughout the world, and we have had to make some tough decisions in order to steer Kumho back on track. I want to make one thing very clear: Kumho Tire is here to stay,” he said emphatically.

“We are addressing our financial situation and strongly believe that we have realistic and workable plans that will successfully prepare us for the future,” he continued. “The work-out plan does not involve courts or the government but it is a business solution that will lead to normalization with the least amount of impact on our business and business partners. The success of the work-out plan requires prudent and effective management of our operations,” Kim said.

One of the other problems faced by Kumho in 2009 was a shortage of product, caused in part by lengthy worker strikes at some of its South Korea. In addition, the added U.S. tariff on imported consumer tyres from China forced the company to shift production from its Chinese plants to facilities in South Korea and Vietnam, costing the company millions and reducing production.

Those facilities are now running at 100% capacity, Kim noted. “We are confident that we will have sufficient supplies and reliable delivery times for all of our customers.” National vice president of sales Armand Allaire continued the comments about the financial and production situations in his presentation to the dealers. Allaire said he was “mildly torqued” in learning that some competitors were forwarding news stories about Kumho’s financial difficulties to “mutual clients,” calling them “foul acts.”

“I have probed and asked tough questions and I have read all of the press on the situation. Let me assure you that we are okay,” he said. “We have taken appropriate, responsible and ethical positions on this. All of our suppliers are getting paid. Nobody was left holding the bag. We are doing the right things. And all of our supply pipelines are intact.”

Allaire said the strike at Kumho plants in South Korea and the “unprecedented” 35 per cent tariff “ combined into a near perfect storm. But during this we delivered well over 8 million units into the U.S. that were every bit as good as any Kumho tyre ever delivered here. “The 35 per cent tariff caused a serious challenge for us in selling tyres here in America,” he continued. “I don’t like it, and I am darn sure you don’t either. We want to be able to compete against the best, do our best, deliver our best and be successful businessmen and women.”

As for the tariff itself, Allaire said, “We did not pass that full 35% tariff on to you. In fact, we are still carrying the bulk of that tariff. We are doing that to compete because we know it is not a level playing field, and everybody is not carrying the same burden. But we are doing more than our fair share to account for these global conditions and remain competitive for you in the U.S.