Hankook Tire Warns of Export and HR Delays if Domestic Factory Total Strike Prolongs

[Asia Economy Reporter Ki-min Lee] The first-ever total strike at a domestic factory since the founding of Hankook Tire & Technology has continued for the 11th day. Concerns are emerging that if the strike prolongs, not only will fourth-quarter exports be affected, but personnel matters may also be delayed, potentially disrupting next year's business plans.

According to industry sources on the 4th, the total strike at Hankook Tire unions affiliated with the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions at the Daejeon and Geumsan factories has been ongoing since the 24th of last month. This is the first total strike since the company's establishment in 1962. After the first collective bargaining session following the strike broke down on the 26th, the management halted operations at the Daejeon and Geumsan factories.

The union side demands a 10.6% wage increase this year, citing that wage hikes over the past five years have been in the 2-3% range and that wages were frozen last year. On the other hand, the management reportedly proposed a 5% raise along with a performance bonus of 5 million KRW.

The industry expects that if the total strike continues, it will negatively impact Hankook Tire's fourth-quarter exports. The Daejeon and Geumsan factories are major production bases accounting for 38.7% of Hankook Tire's total sales (based on last year). They also produce tires for export to the U.S., Europe, and other regions.

The securities industry had forecasted Hankook Tire's fourth-quarter sales to increase by 5.44% to 1.8629 trillion KRW and operating profit to decrease by 15.22% to 192.8 billion KRW before the strike, but these performance projections have been revised downward following the factory shutdown.

Year-end personnel matters, which are conducted ahead of next year's business plans, may also be delayed until labor-management negotiations are resolved. Hankook Tire typically announces year-end personnel changes and organizational restructuring together with its parent company, Hankook & Company, in early December.

If personnel decisions are delayed, concerns arise both inside and outside Hankook Tire that it will hinder efforts to find new business avenues and foster new businesses amid crises caused by rising tire raw material prices, freight costs, and U.S. anti-dumping tariffs.

In August, Hankook Tire established a subsidiary, Invest & Beyond Corporation, responsible for new business investments and mergers and acquisitions (M&A). Subsequently, last month, Hankook & Company and Hankook Tire acquired 36.71% and 24.48% stakes respectively in Precise.ly, a Canadian company specializing in autonomous driving technology, thereby gaining management control.

An industry insider said, "Since production has been adjusted due to a shortage of ships, export damage may be relatively less severe, but if the total strike prolongs, there could be a shortage of supply." They added, "It is a time to swiftly respond and establish next year's management plans, but personnel matters may be delayed due to labor negotiations. A prompt and amicable agreement between labor and management is crucial."