Hankook Tire halts fire-hit Korean plant, threatens a fifth of global capacity

South Korea’s top tire maker Hankook Tire & Technology Co. shut down a local production complex on Sunday due to a fire, stoking concerns over its earnings as it has lost a fifth of its global capacity. 

A fire at 10:09 p.m. Seoul time on the day hit the second plant of Hankook’s complex in Daejeon, about 150 kilometers south of Seoul, the company and local firefighting agency said on Monday. The blaze was presumed to have started from a tire-shaping machine at the plant where flammable materials are stored, according to them.

The No. 2 plant was almost completely destroyed by the flame, which was almost extinguished as of Monday afternoon, and about 400,000 tires stored in a nearby warehouse were burned, the company and the agency said. The firm shut down the entire complex.

“The production was suspended due to a fire at the curing process at the Daejeon plant on March 12, 2023,” said Hankook in a regulatory filing. “The company is checking the details and damage of the accident while trying to minimize the loss through the prompt handling and recovery of the incident.”

EXPORTS 65% OF PRODUCTS TO OVERSEAS MARKETS

The complex, which produces 20 million tires a year, supplies 65% of its products to overseas markets and the rest to automakers in South Korea including the country’s two largest Hyundai Motor Co. and Kia Corp., as well as General Motors Co.’s unit in the nation.

After the shutdown, Hankook shares closed down 5.99% in Seoul’s main stock market, far underperforming a 0.67% gain in the Kospi. The Daejeon complex generated sales of 1.2 trillion won ($896.3 million) in 2021, 16.4% of the company’s total revenue.

Hankook is seeking measures to prevent supply disruptions due to the halt through other plants at home and abroad. But the shutdown is expected to hurt the company’s earnings in the current and coming quarters as it is expected to take a significant time to restart the Daejeon complex, analysts said.

The company manufactures 20 million tires at the other domestic complex in Geumsan and 60 million units in overseas factories – three in China as well as one each in the US, Hungary and Indonesia.

11 PEOPLE INJURED

The main blaze was extinguished after about 13 hours, leaving 11 people injured including 10 of the factory's workers.

The fire authorities dispatched about 750 firefighters, 158 vehicles, nine helicopters and special heavy-duty equipment to put out the main fire.

Strong winds rapidly spread the fire and toxic gas from the plant made the extinguishing work more difficult, according to the firefighting agency.

The authorities evacuated residents living in nearby areas to emergency shelters and three schools in the vicinity either closed down or ran online classes.

Write to Il-Gue Kim at black0419@hankyung.com
 
Jongwoo Cheon edited this article.