Nankang Tyre took over “management rights” of Federal in Q4 2021

According to Federal Corporation’s 2021 annual report, which was published in mid-May 2022, on 15 October 2021, “major shareholder Nankang Rubber Tire Corp. Ltd. Nankang Rubber Tire Corp., Ltd…called an extraordinary shareholders’ meeting to obtain the management right[s].” Federal and Nankang representatives have been contacted by Tyres & Accessories for comment.

Nankang’s move marks the end of a challenging chapter in the development of the Federal tyre brand, which came to a head in the middle of 2021. Then, after already facing significant pandemic-related headwinds, on 15 June 2021, the company was subject to the anti-dumping duties in the final determination by the United States Department of Commerce (DOC) against Taiwan and other countries. Specifically, on 24 May 2021 duties of 84.75 per cent were implemented on Federal tyres.

Since Federal tyre sales to the US accounted for more than 80 per cent of the company’s operating income, the news was a huge blow. Combined with pandemic-related pressures and ever-increasing shipping costs, the result was an operating loss of NT$1.848 billion (£51.681 million) in full-year 2021 results. The company’s percentage change figures during the same period offer even more stark indications of the situation. For example, operating revenue fell 73 per cent; operating income 848 per cent; net income 2,208 per cent.

At the same time, production and sales volumes were also down considerably. Production volumes fell 73 per cent to 920,762 units in 2021 to match similarly low sales volumes: 1.093 million units (down 67 per cent on 2020).

As a result, writing in the 2021 Federal Corporation annual report, Nankang and Federal chairman Ching-Hsing Chiang, set the company on a new course designed to reduce Federal’s reliance on its points of exposure. Moving forward, Federal aims to “increase the proportion of sales in non-US markets”, with Europe, Central and South America as well as Asia being key targets. Secondly, the firm wants to increase the proportion of sales of ― non-passenger car radial (PCR) and light truck (LT) tyres, such as racing tyres. In addition, there are plans to “diversify product lines and develop other tyre products” namely ATV and UTV type tyres.

Originally known as Taifeng Rubber Industry Co., Ltd. Federal Corporation was founded by Chi-Shan Ma in November 1955 with a registered capital of NT$3 million. The company has manufactured automobile tyres since 1959 and was renamed Federal Corporation in October 1964.

Historically, Federal engaged in technical cooperation with Bridgestone Corporation and Sumitomo Rubber Industries, Ltd. in 1950 and 1981, respectively. Federal began the construction of a new plant on 1 October 2014 and obtained the license and factory registration certificate in 2017.