Kumho Tire's union under concerted pressure to accept Doublestar as new owner

Lim Chang-won Reporter Posted : 2018-03-13 15:16 Updated : 2018-03-13 15:16
글씨작게 글씨크게

A file picture shows Kumho Tire workers demonstrating in the streets of Gwangju. [Yonhap News Photo]

SEOUL -- Kumho Tire's union vowed to go ahead with its planned strike this week, resisting concerted pressure from management, creditors and government officials to accept China's Doublestar as the new owner of the debt-stricken tire maker.

The union will stage a full one-day strike on Wednesday following a series of work stoppages last week. Creditors led by Korea Development Bank (KDB) have been in negotiations with Doublestar on selling a 45-percent stake in the country's second-largest tire maker.

KDB has warned of court receivership unless Kumho Tire presents a self-rehabilitation package including the union's consent on the proposed sale of a controlling stake to Doublestar by the end of this month. The state policy bank regards the Chinese company as the most reasonable alternative to minimize losses.

At talks with union leaders, Kumho Tire chairman Kim Jong-ho called for concessions from workers, saying Doublestar is positive about job security, new investments and independent management.

"Unfortunately, the company is not able to pursue self-rehabilitation and needs external capital and support from creditors to avoid court receivership," Kim said. "It is now wise to find alternatives through dialogue."

In March last year, Doublestar signed a share purchase agreement to secure a 42.01 percent stake in Kumho Tire, but the deal broke down because of disputes over job security, the use of Kumho's brand, a proposed cut in prices, and the union's objection among other things. 

KDB has refused to extend fresh loans despite Kumho Tire's credit crisis. However, union leaders have endured delayed wage payment, arguing Kumho Tire could follow the footsteps of GM Korea if Doublestar acquires it. GM wants a bailout from creditors after it decided to close one of its plants in South Korea.

At a session with lawmakers on Tuesday, a senior official from the Ministry of Trade, Industry and Energy said Doublestar is an "inevitable" choice. "As a second best way to maintain jobs, I agree a foreign buyer is inevitable. It is desirable to sell it to a domestic company, but in reality, there is no domestic buyer because of a serious liquidity crisis."

Kumho Tire with plants in China, Vietnam, and the United States was put under a debt workout program in December 2009 due to a severe liquidity crunch. It graduated from the program in late 2014. Ironically, the company's crisis has been aggravated by poor sales in China and mismanagement by its former owner, Kumho Asiana Group.