Clock is ticking at KumhoKumho Tire is at a crossroads as it attempts to come back from the brink of failure. The company is pursuing moves to restructure its debt and business operations, yet its labor union is resisting the efforts. It now faces the most severe crisis in its history, a dire situation defined by a long-term strike, weak financial performance and an ailing parent.
Kumho Tire’s strategy to navigate through these challenges essentially involves overhauling the business. If creditors do not provide emergency funds immediately, the company could have to halt production at the end of this month.
Its creditors have offered to provide financial support under the condition that the labor union agrees to accept the restructuring plan laid out by creditors and stop strikes during the workout period.
Kumho Tire’s labor union rejected the agreement and instead has initiated outdoor rallies and protests in Seoul. On Feb. 17, union members crowded the headquarters of Korea Development Bank - a primary creditor - and held a rally to “stimulate emergency funds.” The union also planned a gathering yesterday in front of Kumho Asiana Group’s headquarters to demand payment of unpaid wages. As long as the union abides by the law, we have no intention of opposing or criticizing their protests. However, it is worth pointing out the catastrophic results that are likely to occur should Kumho Tire’s labor union continue down its current path.
Creditors have made their position abundantly clear: Financial support is conditional on the labor union’s willingness to accept restructuring moves. This is the same requirement issued when creditors provided support to Ssangyong Motor Company. Kumho Tire’s labor union must face the harsh reality that it cannot change the position of creditors by rejecting the restructuring and staging protests. The company’s current executives can’t even change these conditions. The government can’t interfere, either. Without the support of creditors, the company will have to shut down its factories. Time is running out.
Many companies and suppliers that do business with Kumho Tire and residents of Korea are now turning their backs on the union’s overly aggressive tactics. The nation could see a chain of bankruptcies if these suppliers don’t receive payment from Kumho Tire for work performed.
We hope that Kumho Tire’s labor union will now consider the reality of the company’s situation and the very real possibility of its revival, which is tied directly to the restructuring plan.
The fate of a local company with 50 years of history is now in their hands.