A month has passed since a fire occurred at Kumho Tire's Gwangju plant, but no recovery plan has emerged. The local community and labor unions are voicing different opinions on partial resumption of operations and transfer to another region. As the shutdown period extends, Kumho Tire's sales target of 5 trillion won for this year is increasingly in jeopardy, with forecasts suggesting that sales could decrease by as much as 17% this year.
According to Kumho Tire on the 17th, operations at the Gwangju plant have been fully halted since the fire that broke out on the 17th of last month. The fire occurred in Plant 2, but Plant 1 is also interconnected with Plant 2, making independent production by plant difficult. A Kumho Tire official noted, “We are currently waiting for the results of the investigation regarding the cause of the fire,” adding, “We cannot arbitrarily dispose of debris until the results are obtained and are monitoring the situation for now.” The approximately 2,500 workers who were employed here are also on indefinite standby at home.
Kumho Tire plans to present a recovery roadmap for the Gwangju plant next month. Among the proposed plans for plant reconstruction are the resumption of operations at Plant 1 in Gwangju and a transfer to Hampyeong County in Jeollanam-do. If operations are resumed at Plant 1, they only need to bring in the refining (tire material mixing) equipment that was in Plant 2. However, it would be difficult to restore prior production levels with only Plant 1, meaning that Plant 2 would have to be rebuilt, which could cause local residents to protest. The Gwangju plant is located right in front of Gwangju Songjeong Station and near an apartment complex, leading to the possibility of public opinion forming around the need to reduce or eliminate the plant altogether.
The planned transfer to Hampyeong, which has been pursued since 2021, is also one of the options. Kumho Tire has paid a deposit for the site in the Hampyeong Bitgreen National Industrial Complex, located 30 minutes by car from the Gwangju plant. The key issue is the cooperation of Gwangju City. The city must change the land use of the Gwangju plant site from industrial land to commercial land in order to sell it and raise the 1.2 trillion won transfer cost.
Currently, Gwangju City opposes the withdrawal of Kumho Tire, a major local corporation. A local official stated, “The union has agreed to the transfer of the plant,” adding, “There are growing calls to transfer to Hampyeong in light of this fire.”
Kumho Tire recorded its highest performance last year with sales of 4.5381 trillion won and an operating profit of 590.6 billion won. This year, it set a sales target of 5 trillion won, but with the Gwangju plant, which accounts for 20% of total production, halted, setbacks are unavoidable. Song Sun-jae, a researcher at Hana Securities, said, “In the short term, sales could be affected by 300 billion to 800 billion won depending on the resumption scenario.”
To minimize the impact of the fire, Kumho Tire plans to distribute production quantities from the Gwangju plant to domestic plants in Gokseong and Pyeongtaek, as well as overseas plants in the U.S., China, and Vietnam. A Kumho Tire official stated, “Some key products have been switched to production at other plants, and the remaining parts are also under review.”