Representatives of Cooper Tire’s Findlay, Ohio, corporate headquarters have confirmed that the company is facing strike action at its Rongcheng, China, plant. In answer to Tyres & Accessories’ questions, a company spokesperson confirmed that as a result of the dispute, the factory is “in communication with customers…regarding product supply.” No further details of what this means in practice have been released. However T&A has seen once such customer communication that suggests the strike, which has reportedly been going on for around a month, is resulting in the delay of export shipments.
Interestingly, the communique to customers suggests that sales staff is in some way siding with the striking workers: “Because the workers boycott transaction of Apollo and protect their legitimate rights, there is no production at the moment. We regret to inform you that your order delivery time may be delayed.”
However, while Findlay-based executives confirmed that industrial action is taking place, they pointed out that it was limited to one factory. This means the Cooper Kunshan factory located just outside Shanghai is said to be unaffected by the action. Cooper’s corporate spokesperson also reaffirmed the continuing nature of the US$2.5 billion Apollo/Cooper takeover transaction:
“Cooper is currently experiencing a temporary work stoppage at our plant in Rongcheng, China. All other Cooper facilities in China, and throughout the rest of the world, continue to operate as normal. We are in communication with customers as appropriate regarding product supply. The pending merger agreement between Apollo Tyres and Cooper is on track and expected to close by the end of this year.”
Brand politics could be at the root of the troubles
According to the joint venture company itself, Cooper Chengshan (Shandong) Tire Co. (Cooper Chengshan) is a JV between Cooper Tire & Rubber Co. and Chengshan Group founded in January 2006. In March 2010, Cooper extended its majority shareholding of the Chengshan joint venture to 65%. The share acquisition cost Cooper roughly $18 million and came at the behest of minority shareholder Chengshan Group, which exercised a so-called “put” option negotiated as part of the company’s initial Cooper Chengshan investment.
Cooper Chengshan reports that its factory has more than 5,000 staff and an annual capacity of 15 million tires. This figure includes 5 million truck and bus radials, 8 million passenger radials and 2 million bias tires. Brands produced in the factory include: Starfire, Chengshan, Austone, Fortune, Roadmaster and Dean. The plant supplies over 30 leading OE customers including: China National Heavy Duty Truck, FAW-VW, Baotou North Benz Heavy-Duty Truck and Brilliance BMW.
The fact that production at Cooper Kunshan continues unaffected is perhaps not surprising when you consider that this plant, unlike Cooper Chengshan, is 100% owned by Cooper following the U.S. company’s $116.5 million buyout from Kenda in March 2011. Meanwhile, the fact that Cooper Chengshan appears to be largely responsible for producing half a dozen of the company’s house brands – some of which are likely to get lost in a post Apollo takeover brand portfolio – goes some way to explaining what may be concerning striking workers. (Tyres & Accessories)
