KOREA (SOUTH): Korean tire makers move to US

Last year, Korean businesses that rely much on China faced difficulties while those mainly dealing with the U.S. did well, reflecting different economic situations.

Tire makers were no exception. While Hankook Tyre and Kumho Tire suffered from weaker-than-expected demand in China, Nexen Tire posted record sales in the third quarter, riding on sharp growth in the U.S. automobile and tire industries, business sources said. Now Hankook and Kumho will move production to the U.S. this year. Kumho is building a plant in Macon, Geogia, with annual capacity of 4 million. The factory is expected to be completed in March or April, but production will probably begin ahead of its dedication.

Global carmakers are setting up clusters in the U.S. south, including Georgia, an advantageous position for supplying original equipment (OE) tires for new cars. The factory is only 177 km from Kia Motors’ Georgia plant, and 296 km from Hyundai Motor’s Alabama factory. Kumho has poured USD 424 million into the plant, which is as large as 13 football stadiums. The U.S. is the biggest foreign market for Kumho, accounting for 20 % of its sales.

The Georgia plant is expected to reduce transport costs and time sharply, company officials said. It will also reduce Kumho’s production in China by half. The U.S. government began to slap anti-dumping duties on the tires made in China in the latter part of last year.

Hankook is building a plant with 5.5-million annual production capacities in Clarksville, Tenn. When completed in October, it will be Hankook’s fourth overseas plant following those in China, Indonesia and Hungary. Hankook garners about 20 percent of its sales from the U.S. and hopes the plant will sharply raise its market share in the U.S.

“American consumers tend to adhere to made-in-USA products far more than we had expected,” the official said. “The Tennessee plant will help us in the premium tire market there.”

Source: Daily “The Korea Times”, Seoul; 21 Jan 2016
(Syed Rashid Ali, Karachi, Pakistan)