Round World, Flat - Tire Review Magazine

Round World, Flat

One of the problems with trying to cover the global tire industry is the shaky nature of news resources.

Sure, we get a tremendous amount of reliable news from our partners at Tyres & Accessories in Europe and other tire publication friends in the four corners of the world. But we also scan other media sources, a wide range, in fact, that span from the reputable to the questionable.

Matters get worse in lands that can operate a little fast-n-loose with basic North American journalistic standards. In Asia, for example, news services often combine straight facts with brutal honesty, side commentary and a bit of innuendo – perfectly acceptable for Japanese and South Korean media, but out of the ordinary here. European media can be much the same. Take China off the table completely; state-operated media reports what it wants you to know, not what you really want to know.

Because even the most reputable resources come across as potentially dodgy, wading through overseas tire industry-related news reports can be a task. And if it’s hard for us, it’s even tougher for folks with less training and experience than we have.

I mention all of this because we have been fielding questions about the state of affairs with financially troubled Kumho Tire. “I saw this…” and “I read about…” followed by “What do you know?”

Well, to be honest, I don’t know any more than you do. What I do know is pretty simple: It’s parent company made some bad acquisition bets prior to the world-wide economic meltdown, and then saddled its tire operations with the debt from its acquisition of a major construction company. When the economic blew out, the result, as you can see, has been less than favorable.

I met with Kumho Tire CEO J.H. Kim during the recent Kumho dealer meeting in California, and I believe him when he says the company is addressing its issues and will come out of this a better, stronger company. I really do. He is a studied and sincere man, and I have no reason to doubt his veracity.

In recent days, many of you have probably received e-mails or tweets from others containing an opinion piece that appeared this past weekend in the usually reliable Joong Ang Daily. A casual reading of the piece would easily lead one to think the world of Kumho Tire was at hand. Even the headline – Clock is Ticking at Kumho – could be so interpreted.

Shame on the Joong Ang Daily because the real point of its opinion piece appeared a few paragraphs in, past where most casual readers would have stopped. Deeper in the piece, the newspaper took Kumho’s primary labor union to task, stating plainly, “It is worth pointing out the catastrophic results that are likely to occur should Kumho Tire’s labor union continue down its current path.”

Kumho union workers reportedly rejected a creditor-developed restructuring plan, instead holding rallies at Kumho’s primary creditor – the Korean Development Bank – demanding their due.

To the newspaper’s credit – though buried well within the editorial – Joong Ang Daily said, “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 Co. 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.”

Before you start making rash decisions, we strongly suggest you ignore the tweets and blogs and e-mails and make sure you have your facts and information straight. Certainly there are some out there who want dealers and competitors believe that Kumho will not survive, and will plans such seeds wherever and whenever they can.

For our part, we promise to continue to do our best to parse through news reports to get the real details. We also urge you to make sure to check your sources, and carefully read – and I mean carefully – whatever is passed along to you.

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