Kumho’s long awaited breakthrough in the area of civil aviation arrived on February 19. That day Kumho Tires CEO Dr Sae Chul Oh visited the US Embassy in Singapore and, on behalf of the South Korean manufacturer, signed a Bilateral Aviation Safety Agreement (BASA) between South Korea and the US. With the signing of this document, the door has been opened for Kumho to supply tyres to civil aircraft that operate in the United States.
Hankook Tire intends to increase operating profit by 32 per cent this year, a target it will reach through the increased sale of high performance tyres and by raising prices to counter higher raw materials costs. Chief financial officer Cho Hyun Bum told media in Seoul that the company intends to charge 10 per cent more for tyres, a necessary measure if it is to achieve its targeted 2008 profits of 348.5 billion won (£188.7 million). Last year the company made profits of 263.6 billion won (£142.7).
Hankook Tire’s share price has “jumped” 5.4 per cent following an upgrade from Morgan Stanley. The South Korea-based tyre manufacturer’s share price rose to 15,500 won at closing on 20 February, the largest gain since 18 December. The national Kospi index dropped 1.9 per cent. Morgan Stanley raised its rating on Hankook to “overweight”’ from “equal-weight”’ in a report dated today. “While the market seems nervous on higher raw material prices, we are more comfortable with the company’s ability to protect its margin,” Seoul-based market watchers, such as Jason Kang wrote. “The industry has been maintaining pricing power” through consolidation.
The president and chief executive of Kumho, Oh Sae-cheul, has described plans for his company’s $165 million factory in the US state of Georgia as being part of Kumho’s efforts to become a global tyre manufacturing leader. The signing ceremony for the new 123.6 acre facility took place on January 29, and was attended by Mr. Oh and Georgia Governor Sonny Perdue.
“With this plant in the United States, the world’s biggest tyre market, we want to save shipping costs to that market and to emerge as a global leader,” said Mr. Oh to South Korea’s JoongAng Daily newspaper. The establishment of a facility in the US marks Kumho’s first step out of Asia in terms of production; currently the company operates three facilities in China and one in Vietnam in addition to its three South Korean factories.
South Korea’s two leading tyre manufacturers have each entered into original equipment agreements with international manufacturers. The larger of the two deals has been signed by Kumho, who has agreed to supply 400,000 tyres to Chrysler for the company’s Dodge Journey SUV. The value of the agreement has not been disclosed.
The deal signed by Hankook also involves SUV tyres. The Korean company will supply 70,000 tyres for the Volkswagen Tiguan compact SUV. Again, financial details of the OE supply contract have not as yet been made available.
During a state visit to South Korea the leader of Vietnam, Nong Duc Manh, met with Kumho Asiana chairman Sam Koo Park to discuss issues of economic cooperation. Mr. Park attended a lunch meeting with the secretary general of the Communist Party’s Central Committee, at which the two men spoke of ways to increase economic cooperation and general exchange between Korea and Vietnam.
In his welcome address to the secretary general, Mr. Park stated: “We will continue to invest in Vietnam as well as carry out social contribution activities that will benefit the local community…We sincerely look forward to increasing mutual exchange and cooperation between the two countries and wish Korea and Vietnam every future prosperity and a fruitful partnership for a long time to come.”
According to a report published in South Korea’s The Korea Times newspaper, the Korea Occupational Safety & Health Agency reported on November 28 that the deaths of 15 workers at a tyre manufacturing facility in the South Korean city of Daejeon between May 2006 and October 2007 are seen to be a “collective outbreak.” This means, adds the paper, that a possible work related connection is seen between the deaths, as all occurred within a short time to employees working in the same area.
A representative from Hankook Tire has commented on published news regarding the company’s operations in Hungary, allegations initially released by South Korea’s official news agency, Yonhap News, and repeated in the English language newspaper the Korea Times.
The Korea Times reported that the Hungarian government has cancelled previously agreed upon subsidy payments. However, when speaking with Tyres & Accessories, Hankook Europe public relations manager Felix Kinzer refuted the occurrence of any such event. “Both contract parties are fulfilling their contractual obligations according to the agreement,” stated Mr. Kinzer. “Part of these obligations is paying the subsidies according to the progress of the investment.” The more Hankook invests, reiterated Kinzer, the more they will continue to receive in subsidies.
(Akron/Tire Review – New Haven Register) Every new expanse of artificial turf contains plastic grass and about 120 tons of finely chopped tyres that may emit a small amount of cancer-causing agents. The layer of rubber “crumbs” makes the surface softer and more forgiving. It also gives off dozens of compounds that have not been studied or assessed for safety in the United States. Despite assurances from the Connecticut Department of Public Health that the chemicals in artificial turf are little cause for concern, environmentalists and a growing number of public officials in the Northeast are questioning the wisdom of building athletic fields containing the equivalent of 26,000 tyres of unknown composition.
Outdoor sports were played on grass and dirt until 1966 and the advent of the enclosed Houston Astrodome, which was too dark inside to grow grass. A Monsanto subsidiary produced ersatz grass that came to be called Astroturf. In 1967, Indiana State built the first stadium with outdoor Astroturf. Astroturf evolved into a product similar to a plastic shag carpet in-filled with granulated rubber.
(Akron/Tire Review) Hankook Tire has issued a statement in response to news reports that South Korea’s Ministry of Labour is investigating the relationship between the working environment at two of Hankook’s factories and the sudden deaths of 14 employees. The deaths being investigated occurred between May 2006 and October 2007, and workers at the company’s factories in Daejeon and Geumsan, claim the deaths can be linked to a toxic chemical solvent used during the manufacturing process – a claim Hankook reports it has examined but as yet remains unverified.
Hankook’s statement says:
Hankook has signed a long-term agreement securing its use of the Applus+ IDIADA proving ground in Barcelona, arguably the most comprehensive independent proving ground facilities in Europe. The 370-hectare site near the Spanish capital contains a host of facilities including a 7.5 kilometre high-speed circuit, off-road track and a soon to be commissioned wet track. The Korean tyremaker will begin testing there early next year.
The use of this facility comes on top of the 1600 metre wet handling track Hankook has recently built adjacent to its Geumsan plant in South Korea.
Net income of 66.7 billion won (£35.7 million) has seen second-quarter profit for South Korea’s largest tyremaker increase by 52 per cent. Hankook Tire reported in a regulatory filing that the quarter’s sales also went up, by 8.2 per cent to 559.2 billion won (£300 million). The increased focus on the more lucrative high performance tyre market has been credited as a factor in the company’s positive results. Hankook’s overseas operations have also played a role.
Hankook expects to boost net income by 36 per cent this year to 226.9 billion won (£121.6 million), largely thanks to exports and higher OE sales to luxury vehicle manufacturers.
(Akron/Tire Review) South Korea’s Kumho Tire Co. already plans to expand annual capacity at its brand new Changchun plant, nearly doubling tyre build from 3.15 million to 6.3 million tyres. The expansion will take an investment of $108 million, Kumho officials said.
The plant began production on July 27, and will be the primary OE tyre supplier to Chinese carmaker First Automotive Works.
On June 7 South Korean industrial giant Hyosung Corp. revealed its plans to build a new £80 million tyre cord facility in Vietnam by 2010 as part of its drive to expand global production. The plant will be located in Dong Nai province, near Ho Chi Minh City, and will eventually produce 53,000 tons of tyre cord annually, much of which will be destined for export to Europe, South America and other parts of Asia.
In an attempt to boost its sports marketing profile, Kumho Tires has invited phenomenally popular football team Manchester United to participate in a friendly game that the tyremaker is title sponsoring. The Kumho Tires Cup 2007 Manchester United Korean Tour, as the event is to be known, will take place on July 20 at the Seoul World Cup Stadium, and the lads from England will compete against leading South Korean professional football team FC Seoul.
A press conference held on April 27, attended by Kumho Tires CEO Sae-chul Oh, Manchester United president David Gill, FC Seoul president Wan-kyung Lee plus a number of dignitaries outlined the plans and hopes for July’s high-profile event. Kumho Tires’ president, Mr. Oh, said, “We hope that this game can lead young soccer lovers to have more aspiration for the future while revitalising general public’s interest in soccer reaching out to more people.”
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