Kumho to move its tire plants within Nanjing

Kumho Tire said Wednesday that its factories in Nanjing, China, will be relocated within in the city by 2016.

In 2011, the Nanjing city government told all businesses operating factories in the city to move to the outskirts as part of its plan to improve residential areas. The company eventually agreed to move its plants for passenger car tires (PCR) and truck and bus radial tires (TBR) to an economic development zone in Pukou, a district in Nanjing, starting next year.

The tire maker said it will hold a groundbreaking ceremony on Thursday for the new factory with guests and VIPs in attendance, including Kim Chang-kyu, president of Kumho Tire; Park Sam-koo, chairman and CEO of Kumho Asiana Group; Yang Yuanyuan, China’s deputy director of State Administration of Work Safety; and Luo Qun, a member of China’s Nanjing Municipal Committee.

Kumho said its PCR and TBR factories will be combined into a single new factory to make production more efficient. The facility will be equipped with new high-end machines that the company expects will improve the quality of its products, which it hopes will make it more competitive in the global tire market.

The Nanjing city government said it would cover the costs of basic infrastructure at the new factory. It also said it will provide the land, water and electricity and connect roads.

Kumho Tire became the first Korean company to produce goods in Nanjing in 1994 and also has factories in Tianjin and Changchun.

Also on Wednesday, the company announced that it has reached a tentative agreement with its labor union on wages in an attempt to bring an end to eight months of negotiations.

The agreement stated that the company will increase workers’ base pay by 15 percent and pay a 5.1 million won ($4,700) bonus for 2014. This is the first time in five years that Kumho has agreed to raise the base pay.

The nation’s second-largest tire manufacturer froze employees’ base pay in 2010 when it entered a debt workout program.

The union will vote on the tentative agreement later this week.

The two sides also agreed to establish a joint committee consisting of members of the labor union and the company to discuss implementing a new wage system, which will take effect in April when the two sides are set to start negotiating for their 2015 salary.

Currently, the company wants a wage system that adds a predetermined amount of money onto the workers’ base pay each year, while the labor union wants a system that multiplies the rate of each annual wage increase and a multitiered base pay system.