Kumho Tire fire under control: Company to lose 825 million won daily if Gwangju plant stays closed

Home > Business > Industry

Kumho Tire fire under control: Company to lose 825 million won daily if Gwangju plant stays closed

Published: 18 May. 2025, 17:18

Audio report: written by reporters, read by AI

Black smoke is seen above the Kumho Tire factory in Gwangju on the morning of May 18. [YONHAP]

A fire that broke out at Kumho Tire’s Gwangju plant on Saturday was brought under control after about 32 hours, but uncertainty still surrounds when operations will resume after being halted due to the incident.

According to Kumho Tire on Sunday, the Gwangju facility is the oldest of Kumho’s three domestic plants, alongside those in Pyeongtaek in Gyeonggi and Gokseong, South Jeolla. Built in 1974, it accounted for 46 percent — or about 12 million units — of the company's 26 million domestically produced tires in 2023. The plant manufactures an average of 33,000 tires per day, mainly for passenger cars, light trucks and trucks and buses. It also produces high-performance Ecsta Sport tires along with the Gokseong plant.

Fire authorities try to put out a fire at the Kumho Tire factory in Gwangju on the morning of May 18. [NEWS1]

The factory’s plant No. 2, of which about 80 percent was destroyed due to Saturday’s fire, is where original equipment (OE) tires for new vehicles made by Hyundai Motor, Kia and three other domestic automakers, are produced. It’s also where tires supplied for the Japan-bound Hyundai Casper, assembled by Gwangju Global Motors are produced.

Kumho Tire plans to meet short-term demand with existing inventory and boost output at its Pyeongtaek and Gokseong plants. Still, the indefinite halt at Gwangju may cause long-term disruptions in supply.

If Kumho cannot maintain production levels, automakers are expected to shift supply contracts to rival tiremakers Hankook Tire & Technology and Nexen Tire. After a fire at Hankook’s Daejeon plant in 2023, Hyundai and Kia switched some vehicle models to tires from Kumho and Nexen.

Kumho Tire posted its highest-ever earnings last year, with sales of 4.54 trillion won ($3.24 billion) and an operating profit of 590.6 billion won. But this year’s outlook is clouded by potential losses from facility damage, recovery costs and disrupted deliveries.

Kumho Tire CEO Jung Il-taik apologizes for the fire, vowing to make all-out recovery efforts on May 18, in front of the Gwangju factory. [YONHAP]

OE tires typically sell for about 25,000 won each. With daily production at 33,000 units, Gwangju’s shutdown represents a daily loss of 825 million won. If the plant remains closed for 100 days, losses could reach 82.5 billion won.

Factoring in repair costs and potential compensation to nearby residents, Cho Chul, a senior research fellow at the Korea Institute for Industrial Economics & Trade, predicts that “total losses may soar into the hundreds of billions of won.”

The fire at Hankook’s Daejeon plant in 2023, for example, resulted in facility damage estimated at 75.9 billion won, according to the Financial Supervisory Service.

Saturday’s fire is also raising calls to relocate the Gwangju plant. Located near KTX Gwangju Songjeong Station and residential areas, the site has long been considered unsuitable for industrial use. Kumho has been pursuing relocation since 2019 and selected a site in the Bitgreen National Industrial Complex in Hampyeong County in South Jeolla last year. Talks with local authorities, however, have yet to yield progress.

Some industry insiders argue that if the cost of restoring the current plant is comparable to building a new one, relocation may be the more practical choice. After the Daejeon fire, Hankook Tire chose not to fully reopen the damaged plant, instead expanding output at its Geumsan facility in South Chungcheong located near its Daejeon plant.

A helicopter tries to put out a fire at the Kumho Tire factory in Gwangju on May 17. [NEWS1]

“The fire caused significant harm to residents nearby,” said Kwon Yong-joo, professor of automotive transportation design at Kookmin University. “Kumho Tire may now seriously consider relocating its factory to an industrial zone away from residential areas. In the long run, building a new, eco-friendly plant with advanced technology could prove the wiser option.”

BY KIM HYO-SEONG [[email protected]]