Kim Jong-ho, chief executive officer of Kumho Tire, met two union leaders who staged a demonstration atop a utility pole near the tire manufacturer’s plant in Gwangju. The leaders ended their sit-in after Kim’s visit, 12 days after the protest began.
According to media sources within South Korea, the sit-ins and walk-outs by unionized Kumho Tire workers have ended; however, the union group continues efforts to block the sale of the tiremaker to Chinese tiremaker Qingdao Doublestar. The main creditor, Korea Development Bank (KDB), asked Kumho Tire to reach an agreement on the proposal to turn the company over by March 30, an ultimatum that could lead to court receivership if not met.
Still, the union is at odds with the creditor over proposed “adjustments” of salaries and corporate benefits, cuts necessary to turn the company around.
Kumho’s union launched a one-day walkout on Wednesday to protest the foreign acquisition of the company and other demands. The due diligence for the newest iteration of the deal kicked off on Wednesday and will likely last for two to three months, according to local business news reports.
“Financial Services Commission Chairman Choi Jong-ku said Kumho Tire creditors’ demand to normalize the Korean tire manufacturer mainly by selling the firm’s majority stake to a Chinese firm is a ‘prerequisite’ for the firm’s survival, during a press conference on March 14,” said The Korea Herald article. “Choi called for the tiremaker’s labor union to comply with the self-restructuring plan in the making, amid the union’s opposition due to fears of employment insecurity and a technology leak.”
According to reports, the takeover deal between Qingdao Doublestar‘s parent Doublestar Group and Kumho Tire creditors, agreed to on March 5, would allow the debt-saddled manufacturer to take advantage of the global sales network of Qingdao Doublestar, which creditors have said would boost the sales performance of Kumho Tire. In the process, the ownership of creditors would be reduced to a combined 23.1 percent from the current 45 percent. But the deal has been met with protest from the labor union. In February, creditors extended a grace period through the end of March for the labor union to accept the self-restructuring plan. If the grace period is terminated, Kumho Tire must either repay the loan or file for bankruptcy.