Outbreak takes toll on auto, tires, steel productionHyundai Motor halted one production line at its Ulsan plant, its largest in Korea, until Friday. The line makes Tucson and Nexo SUVs, mostly exported to markets like North America and the Middle East.
It’s a measure of the uneven effect of the coronavirus pandemic that Hyundai’s domestic autos sales actually rose in March over a year before - and by a healthy 3 percent.
But its exports to the United States, the automaker’s biggest export market, nosedived 43 percent.
As goes the U.S. market, so will go Europe and South America.
That spells dwindling demand for cars worldwide due to the coronavirus pandemic, which is forcing production cuts by carmakers and also dealing body blows to related industries including steel and tires.
Hyundai’s affiliate Kia Motors is currently in talks with its union to suspend production at plants in Gwangmyeong, Gyeonggi, as well as a plant in Gwangju.
The virus has forced Hyundai Steel into what it calls emergency management, and it has decided to adjust its production of steel plate for automobiles for this year.
It plans to reduce operations at its steel mill in Dangjin, South Chungcheong, as a cost-cutting measure.
The company is also considering selling an office building in Jamwon-dong, southern Seoul, as well as a steel pipe business to build up liquidity.
Korea’s leading steelmaker, Posco, is also looking into scaling back production as global steel demand contracts.
“Local steel companies have no other choice but to cut back production as demand from the automotive industry is falling,” said an official in the industry.
Tire companies are also tightening their belts. Korea’s three leading tire manufacturers - Hankook, Kumho and Nexen - are making adjustments to their production in Korea and have halted all production in overseas plants for all of April.
Hankook Tire has a plant in the American state of Tennessee, while Kumho has a plant in Georgia. Nexen has one in the Czech Republic.
Additionally they have started taking restructuring steps to build up liquidity.
Hankook Tire plans to relocate its headquarters to Pangyo, Gyeonggi, while renting out its current office space in Yeoksam, southern Seoul.
The Korea Automobile Manufacturers Association on April 9 asked the government for at least 32.8 trillion won ($27 billion) in relief for the industry.
“If the automobile industry, which has strong links with other industries, falls into crisis, Korea’s economy could be shaken,” the association’s Chairman Jung Man-ki told the JoongAng Ilbo. “While supporting self-employed people and small businesses was important in the early stage [of the pandemic], creating a safety net for major manufacturers has become more important [today].”
BY LEE DONG-HYUN [email@example.com]
More in Industry
Luxury loungewear is no longer just for lounging
KGC to work on a ginseng-based vaccine adjuvant
Hanwha Techwin continues selling CCTV systems overseas
Popeyes to close all branches in Korea this month
Contract signed for Covid-19 vaccine