이 기사는 2021년 09월 27일 07:53 thebell 에 표출된 기사입니다.

South Korea’s Kumho Tire has scrapped plans to produce truck and bus radial (TBR) tires at its Vietnamese plant after a backlash from its labor union, instead opting to maintain its focus on passenger car radial (PCR) products.

The company said in a revised filing on September 16 that it no longer intends to set up production facilities in Vietnam to make TBR tires and will instead allocate the entire 340 billion won ($288 million) to increasing production capacity for PCR tires there.

The change has been made as the company’s management decided to step back after a severe backlash from its labor union. The two sides earlier this year reached an agreement to strengthen the competitiveness of the company’s factories at home and enhance job security.

“Plans to make TBR tires in Vietnam have been canceled, but more discussions are needed to determine how much production capacity for PCR tires should be increased,” an official at Kumho Tire said. “Details have not been finalized yet.”

As a result of the revised plan, Kumho Tire will continue to make TBR products at two of its South Korean factories only. The company has three production plants at home and five in China, Vietnam and the United States.

Kumho Tire does not disclose revenue by product type, but it is said that PCR tires are the mainstay of the company while TBR products account for an insignificant portion of the total revenue.

Kumho Tire in March announced plans to invest 340 billion won in its Vietnamese production facility in response to the US government’s decision on anti-dumping against South Korean tire makers.

The US Department of Commerce last December preliminary imposed a 27.81% duty on Kumho Tire’s products imported from South Korea, while imposing a 10.08% duty on its tires imported from Vietnam. The final duties announced in June were 21.74% and 7.89%, respectively.

The company’s plan to increase production capacity in Vietnam was to export more products from its plant there to benefit from lower duty advantage. North America is the second largest market for the company after the domestic market, with the region accounting for 24.18% of the total revenue of 2.16 trillion won in 2020.

Kumho Tire has been stepping up efforts to improve profitability since its acquisition by China’s Doublestar in 2018. It reported 11.8 billion won in operating profit in the first half of this year, a significant improvement from 53.9 billion won in operating loss in the same period last year.

“There have been continued discussions internally on expansion of the TBR business, but we ultimately decided to wait further for prospects for sales to become clearer,” the company's offical said. “We believe the change to the plan will have little impact on profitability as TBR products’ contribution to the overall revenue is small.” (Reporting by Su-jin Yoo)