News from the SEMA show in the US indicates that South Korea’s Daewoo International wishes to bring its own home brand tyres to market. The company has developed its own tread patterns and owns the moulds and plates used in production, however the tyres will reportedly be manufactured in China by several manufacturers, including Triangle Tyre. The company is looking to distribute the range internationally.
On 15 October EU Trade Commissioner Catherine Ashton and Korean Trade Minister Kim Jong-hoon initialled a free trade agreement (FTA), which the EU calls “the most important ever negotiated between the European Union and a third country.” Estimated to be worth a total of 19 billion euros in new trade for EU exporters, the agreement is designed to remove virtually all tariffs between the two economies.
However, it is a bilateral deal. And European carmakers, apparently fearful of being swamped by imports of more economically priced Korean cars in an already depressed market, were the first to call for a rethink through industry body ACEA. However this appears to have been too little too late and according to the commission, the initialling signals the end of negotiations. The current “stable legal text” will be formally presented to EU Member States in early 2010. So what does this mean for the European tyre (and associated product) markets?
Tyrepac, reputedly Asia’s first online tyre portal, has launched a mobile service in Hong Kong. “We are extremely pleased to now offer the same convenience as consumers in Singapore [where the company is based]…to consumers in Hong Kong.” said Tyrepac managing director and co-founder, Ler Hwee Tiong. According to the company, battery change and “a host of other services on top of the tyre changing” will soon be offered.
Hankook Tire intends to build a new factory – its sixth overseas plant – somewhere in Southeast Asia. South Korea’s Yonhap news reports company CEO Suh Seung-hwa as stating on October 23 that Hankook may spend between US$250 million and $300 million building the new facility, which is expected to have an annual capacity of ten million units.
Asian retail tyre portal Tyrepac has announced the soft launch of its China operations, in Guangzhou, China. The company reported on October 8 that consumers can now purchase tyres online via its www.tyrepac.com.cn website.
2009 could be a breakthrough year for the Korean tyremakers. A collection of circumstances (some clearly the result of famed Far Eastern forward planning, and others distinctly more fortuitous), mean Kumho, Hankook and Nexen have found themselves poised to sell increasing numbers of replacement tyres in the UK and Europe. In addition, their successful efforts in the OE department – ironically helped along by the shaky macro-economic environment – mean this perfect storm of variables could leave the Korean manufacturers in an even stronger position when the dust settles. In the UK, a market where mid-range and economy tyres make up around 60 per cent of unit sales, official figures show that 4.7 million passenger car tyres of South Korean origin were imported last year. However, this cannot be the complete total because it only includes tyres imported from factories actually situated in South Korea. Owing to the fact that all three have significant manufacturing presences in China, and tyres often enter the market by “indirect routes,” it is likely the true total is a lot more.
European carmaker’s association ACEA has written an open letter to the European Commission urging it to reassess the conditions of the forthcoming free trade agreement (FTA) with South Korea. According to the ACEA, the FTA will “have a significant impact on jobs and competitiveness in the EU economy and rushing into signing a bad agreement is wrong.” ACEA reported that the trade commissioner intends to initial the FTA in October.
In South Korea, shares in Hankook Tire gained 1.84 per cent after the tyre manufacturer announced that it would invest 230 million euros ($334.9 million) by 2011 to expand its factory in Hungary.
The recent labour dispute Kumho Tire in South Korea ended peacefully after “marathon” talks concluded peacefully on Saturday 5 September at 21:00. At the conclusion of the negotiations, local newspapers report that union workers agreed not to receive 2008 bonuses and to negotiate 2009 bonuses in the first quarter of 2010. As a result of the mutual agreement, Jooang Daily reported that Kumho management’s called off previously announced layoffs – a fact emphasized union sources. It is not clear if this means all 733 workers who were to be laid off on 24 August will now be able to work again.
Jooang quoted Kumho Tire as saying that the average annual salary of the 4,200 employees who work the company’s production line is 70 million won ($56,600). The company also said more than 30 per cent of workers receive an annual paycheck of more than 80 million won.
The Korea Times has reported lockouts at three of Kumho’s facilities in South Korea. According to the paper, the company lockouts – the first Kumho has enacted in 15 years – began on August 25 in response to a union strike against its downsizing plan. Employee access to the Gwangju, Gokseong and Pyeongtaek facilities was blocked as of 4am on August 25, following 20 failed negotiation sessions.
In an August 18 news story, it was revealed that Hankook Tire Co. and some of its manufacturing plant managers were found guilty of failing to prevent a series of work-related deaths at Hankook facilities.
It is alleged Kumho Tire will lay off 18 per cent of its workforce during September. According to South Korea’s Dong-a Ilbo (East Asia Daily), the tyre maker has filed an application to this effect with the Gwangju Regional Labour Office, and the country’s Labour Ministry stated on August 17 that Kumho will dismiss 706 employees on September 16. In its application, the company cited a number of reasons for its decision, including aggravating business conditions, rising accumulated deficits, and a lower operating rate at its factories due to declining profits. On August 10 Kumho began offering early retirement packages to employees. Only 20 workers have so far applied to take such an offer, however.
Hankook Tire has is recalling a number of RA08 van tyre sizes in what the company describes as a “precautionary measure.” The sizes affected are: 185/75R16C, 205/75R16C and 215/75R16C produced at the company’s plant in Hungary between April 2008 and June 2009. According to the company, no other tyres produced in Hungary are subject to this action. Tyres supplied as OE to Ford’s Transit are said to similarly un-affected as they are produced at the company’s Deajon plant in South Korea.
Consumers who use the affected tyres are asked to immediately contact their local tyre dealer. Further consumer information will be offered at Hankook Tire Europe’s website (www.hankooktire-eu.com). Alternatively, consumers and the trade are being directed to contact their national representatives.
Kumho Tire has announced the appointment of Jong Ho Kim (J.H. Kim) as its new CEO and president. He will be based at the company’s headquarters in Seoul, South Korea. Mr. Kim has held numerous sales and marketing positions since joining Kumho in 1976 including nine years in the USA, initially as general manager, then managing director and finally as the vice president of sales for the company’s American operations. He then assumed the role of executive vice president of sales and marketing for the parent company back in Korea.
Kumho has announced that its three tyre plants in South Korea will be closed until Monday 20 April following a sustained period of slowing sales. The measure is designed to keep company inventories under control, according to a press release.
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