US Anti-Dumping Tariffs and Labor Unions... Tire Industry Faces Deep Concerns

Domestic Tire Industry Weighs Overseas Investment Amid Anti-Dumping Tariffs... Union Opposes

[Asia Economy Reporters Jehoon Yoo, Gimin Lee] It is not only the finished car manufacturers who are struggling with labor unions interfering in management. Recently, the tire industry, which is facing a "triple hardship" due to U.S. anti-dumping tariffs, is also going through turmoil due to union opposition to overseas investments and the emergence of office worker unions.

According to the industry on the 24th, the Kumho Tire branch of the Korean Metal Workers' Union under the Korean Confederation of Trade Unions formed the "Vietnam Plant Expansion Opposition Countermeasures Committee" last month together with the office worker union and the irregular worker union, opposing the company's plan to expand the Vietnam plant.

Earlier, as the imposition of U.S. anti-dumping tariffs became apparent, Kumho Tire decided to invest about 25 billion KRW to expand the production capacity of its Georgia plant in the U.S. from 4 million to 4.5 million tires annually as a countermeasure. It also planned to invest 340 billion KRW in the Vietnam plant to increase tire production by 3.8 million units annually.

The Kumho Tire union opposes the Vietnam plant expansion plan out of concern that overseas investment could lead to job cuts. They claim, "The company is using anti-dumping tariffs as a pretext to unilaterally transfer North American orders from domestic plants to Vietnam through the Vietnam plant expansion, and through equity dividend investments, is opening the way for Double Star to seize profits from the Vietnam plant," making this a key issue in this year's wage and collective bargaining negotiations.

The problem is that the tire industry is suffering from a "triple hardship." This includes soaring logistics costs due to the COVID-19 pandemic, rising raw material (rubber) prices amid global economic recovery, and the imposition of anti-dumping tariffs. On the 23rd (local time), the U.S. International Trade Commission (ITC) made a final ruling that passenger car and light truck tires from Korea, Taiwan, and Thailand caused material injury to the U.S. tire industry. Prior to this, the U.S. Department of Commerce decided to impose anti-dumping tariff rates of 27.05% on Hankook Tire, 21.74% on Kumho Tire, and 14.72% on Nexen Tire.

The tire industry views overseas investment as an unavoidable choice for survival. A Kumho Tire official said, "Although countervailing duties are expected to be imposed on tires made in Vietnam, producing domestically and exporting to the U.S. would inevitably result in additional losses amounting to hundreds of billions of KRW."

Competitor Hankook Tire has also made investments to double the production capacity of its Tennessee plant (from 5.5 million to 11 million tires) and plans to circumvent anti-dumping tariffs through its plants in Hungary and Indonesia. Nexen Tire aims to overcome the anti-dumping tariff barrier by normalizing the operating rate of its Czech plant.

The emergence of office and research worker unions in addition to existing production worker unions is also a considerable burden for the tire industry. They are demanding the elimination of discrimination with field workers and improvements in treatment. In April alone, the Kumho Tire office worker union was established, and Nexen Tire's office and research staff plan to form a separate union within the year. Kumho Tire posted an operating loss of 4.4 billion KRW last year due to the impact of the COVID-19 crisis, turning to a deficit, while Nexen Tire's operating profit fell by 80% year-on-year to 39.4 billion KRW.

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