Hyundai Motor Partner Korea Gates Leaves Korean Market After 31 Years

[Asia Economy Reporter Woo Su-yeon] Domestic automobile parts manufacturers hit hard by the novel coronavirus infection (COVID-19) are increasingly unable to withstand management difficulties and are withdrawing from their businesses. A wave of COVID-19-related chain closures is spreading across the industrial ecosystem, centered on first- and second-tier suppliers of finished car companies, including Hyundai Kia Motors.

According to the industry on the 26th, Korea Gates, which produces power transmission rubber belts for automobiles, decided to close its manufacturing facilities in Korea as of that day and withdraw from the Korean market.

On the same day, Korea Gates stated, "We have continuously reviewed our global business environment to improve business efficiency in the automotive market," adding, "According to this review, we have decided to close our manufacturing facilities in Korea and withdraw as of today."

They added, "This decision is part of the restructuring measures that the headquarters have been implementing worldwide since 2019, and the schedule was inevitably accelerated due to the global COVID-19 pandemic." Furthermore, after withdrawing from the business, Gates headquarters promised to support domestic customers through Gates Unita Korea, an independent corporation in Korea.

Korea Gates was established in 1989 in Korea as a joint venture between the American Gates Corporation and the Japanese Nitta Corporation, which lead the power transmission rubber belt market. Thus, Korea Gates is undergoing business restructuring about 30 years after entering the Korean market. It is known that 148 employees work at the Korea Gates Daegu plant.

Recently, as Hyundai Kia Motors' production sharply declined due to COVID-19, concerns about the collapse of suppliers have spread throughout the industry. Earlier, Myungbo Industry, a second-tier supplier of Hyundai Motors, sent business abandonment notices due to management difficulties to Hyundai Motors' first-tier suppliers such as Dongguk Industrial, Sewon E&I, and Rear Korea. Myungbo Industry, located in Gyeongju City, Gyeongbuk Province, has stopped factory operations and restricted access.

Myungbo Industry produces crash pads and fuse boxes used in Hyundai Motors' Palisade, Santa Fe, Tucson, and Nexo. If parts supply is interrupted, production disruptions are inevitable not only for first-tier suppliers but also for Hyundai Motors. According to the industry, Hyundai Motors' inventory of Myungbo Industry parts is said to last only about two days.

Hyundai Motors stopped part of the production line at the Ulsan plant due to the suspension of operations at Deokyang Industry, a first-tier supplier, from the 12th to the 16th. If parts supply interruptions continue, the finished car production line will inevitably be affected, so Hyundai Motors is currently seeking countermeasures.

This content was produced with the assistance of AI translation services.