Kumho Tire Faces Labor Showdown Amid Post-Fire Recovery Uncertainty

Kumho Tire, the second-largest tire manufacturer in South Korea, is embroiled in a labor dispute over its unreleased recovery plan following a devastating fire at its Gwangju plant in May. The situation has raised concerns about the timeline for restoring full production capacity in the city.

On Wednesday, the Kumho Tire chapter of the Korea Confederation of Trade Unions announced plans to demonstrate outside the company’s Seoul office on Thursday. The union criticized management for reportedly considering a reduction in domestic production as part of its post-fire recovery strategy.

\”We’ve learned that Doublestar, Kumho Tire’s China-based majority shareholder, intends to construct a new plant in Korea with an annual capacity of 3.5 million tires – smaller than the current Gwangju facility. Simultaneously, they’re fast-tracking plans for a new 6 million-unit plant in Europe,\” the union stated.

\”We initiated discussions about this plan on June 30 and have been protesting since, but the company remains unresponsive to our concerns.\”

In the wake of the 76-hour blaze that erupted on May 17, causing extensive damage to the Gwangju No. 2 plant, Kumho has yet to unveil a clear recovery strategy. Operations at both the fire-damaged facility and the adjacent, unaffected No. 1 plant remain suspended.

This uncertainty has fueled speculation about Kumho’s future production plans, including whether it will rebuild the Gwangju plant, relocate to Hampyeong in South Jeolla Province, or shift production overseas.

Prior to the Gwangju fire, Kumho Tire had been exploring options for its first European plant to bolster its presence in a region that generates about 25% of its total revenue. Poland, Serbia, and Portugal were shortlisted as potential locations just a month before the incident.

The union is insisting that Kumho prioritize restoring the Gwangju plant’s original annual capacity of 12 million tires before pursuing any overseas expansion plans.

However, in its regulatory filings, Kumho Tire maintained that no decisions had been finalized regarding a potential relocation to Hampyeong or the establishment of a new European facility.

\”We’re currently in discussions with the labor union about the recovery roadmap and expect to make an announcement within July once it’s finalized,\” a company spokesperson stated.

As the company and union continue to clash over the recovery plan, the announcement, initially slated for early July, is likely to face further delays. This impasse could potentially slow the overall recovery process.

Meanwhile, according to Daishin Securities, the production halt at the Gwangju plants – which account for 20% of Kumho Tire’s total global output – is expected to impact the company’s performance starting in the latter half of 2025, as domestic inventory dwindles.