Hankook Tire halts production after “huge” fire at Daejeon plant

Fire broke out at Hankook Tire and Technology’s Daejeon factory at 22:09 local time on Sunday 12 March. 11 people were injured, 10 Hankook staff members and one firefighter. The injuries are said to relate to smoke inhalation and are not described as serious. Now, as a result of the fire, production has been halted for an indefinite period. Nevertheless, staff say they are making every effort to get the factory operational again.

Although only buildings in one of the two Daejeon factory complexes were damaged by the fire, Korea Herald cited a Hankook Tire official as saying that the factory is shutting down its operation as part of safety measures: “We don’t know when the plant will resume operation at the moment”.

Quoting fire officials, Korea Herald reported that “much of the 87,000-square-meter logistics building, which housed about 400,000 tyres, was burned down”, suggesting on-site stocks have been seriously impacted.

“The company is assessing the direct and indirect losses from the fire. The cost of damage from the disaster will be announced once the amount is confirmed,” Hankook Tire said in a regulatory filing. According to the company, Hankook’s Daejeon site had insurance worth 1.7 trillion won ($1.3 billion).

The plant, which is capable of producing between 40,000 to 45,000 tires per day for a wide range of vehicles including buses, passenger cars and trucks, will take some time to return to normal operations. In the meantime, Hankook Tire plans to fill in supply gaps by utilizing additional manufacturing and production capacity elsewhere.

While production is restored Hankook plans to divert capacity from across its production portfolio. In total, Hankook runs eight tyre factories: two in Korea, three in China and one in Hungary, Indonesia and the US. The Daejeon, Korea tyre factory reportedly accounts for about 20 per cent of its total global production. About 35 per cent of tyre production at the Daejeon plant is supplied to domestic automakers, while 65 per cent is exported.

An official at Hyundai Motor Group, a major customer of Hankook Tire, told The Korea Herald that Hyundai has checked its inventory and will have no problems with tyre supply.

Hankook Tire’s Daejeon plant also suffered a fire in October 2014. That fire resulted in an estimated 6.6 billion won worth of asset damage and over 180,000 destroyed tyres.