Hankook Tire cuts more jobs as it struggles to recover from fire

South Korea’s largest tire maker Hankook Tire & Technology Co. plans to cut more jobs through a voluntary retirement scheme as the company is struggling to recover from its March fire, which completely burned one of its domestic factories.

The company on Tuesday began receiving applications from employees at its Korean factories, industry sources said.

All production line employees at domestic sites, regardless of their years of service, are eligible.

The planned job reduction is the third such scheme following its first voluntary retirement in April and a second one in May in the wake of the March fire.

Hankook Tire has been reducing its workforce after a blaze completely destroyed one of its plants in Daejeon, a city south of Seoul. The fire brought all of Hankook Tire’s production lines there to a full stop, resulting in about 40 billion won ($30 million) in lost production.

The damage was so severe that the company decided not to reconstruct the destroyed facility, the No. 2 plant.

The No. 1 plant, which didn’t suffer significant fire damage, started partial operations earlier this month.

MOVES TO MAKE UP FOR LOSSES

Before the fire, the two Daejeon plants shipped 65% of their products abroad. At home, Hyundai Motor Co. and Kia Corp. are its major customers, along with the Korean operations of General Motors Co.

The tire maker plans to boost sales of high-value-added products, including tires for electric vehicles, to make up for fire-related losses.

The company has also raised domestic factories’ operation rates to 92.8% from 87.8% at the end of March.

Local production accounts for about 40% of its entire annual volume of 100 million tires.

Besides the Daejeon complex, Hankook Tire runs a plant in Geumsan, a city near Daejeon. It also operates plants overseas – one in the US and another in Hungary.

Analysts expect the company’s earnings to improve for the rest of the year, buoyed by stabilizing logistics and raw materials prices.

The market consensus for Hankook Tire’s third-quarter sales is 2.26 trillion won, down 1.5% from the year-earlier period. Its third-quarter operating profit is forecast to rise 31.2% on-year to 252.4 billion won.

Write to Sungsu Bae at baebae@hankyung.com

In-Soo Nam edited this article.