Kumho Tire's trade union workers have agreed to support creditor plans to sell South Korea's second largest tyre manufacturer to China's Qingdao Doublestar Company.
In a ballot held at the tyre maker's main plant in Gwangju on Sunday, just over 60% of the participating unionised workforce voted in favour of the acquisition – mainly to prevent the insolvent company being placed under court receivership.
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The union nevertheless remains concerned that Qingdao Doublestar, a manufacturer of commercial vehicle tyres, is mainly interested in acquiring Kumho's tyre technologies and that huge layoffs are likely in the long term.
Qingdao Doublestar has committed to investing in Kumho Tire's South Korean facilities and to guarantee the jobs of the company's 5,000 employees – including some 2,000 white collar jobs, for at least three years after the acquisition.
The workers have agreed to increase productivity at the company's plants, accept a wage freeze and forego bonuses and many benefits for 2018 and 2019 to help support a turnaround plan for the company.
A committee will be formed consisting of Kumho Tire's management, union representatives, the company's main creditor Korea Development Bank (KDB) and Doublestar to help formulate a recovery plan.
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By GlobalData
