Troubled Kumho Tires Faces Strike

The troubled Kumho Tires faces a general strike by its workers following its management's announcement of a massive layoff plan. The company's labor union said Thursday the action will be launched on March 16 at the earliest unless the ongoing negotiations make notable progress.

The strike threat came one day after Kumho Tires management announced the names of 1,199 workers at its factories in Gwangju, who are supposed to be laid off on April 2 under a restructuring plan. The management said 1,006 out of the affected workers will be rehired by subcontractors.

In a marathon meeting, the labor union tried to stop the layoff plan by reducing salaries and bonuses.

But their suggestions did not have the desired effect.

"If we accept the proposal from the labor union, we will shoulder 38 billion won in additional costs each year," a spokesman for Kumho Tires management said. "We cannot accept it."

Following the notification, a petition was filed with a provincial labor relations committee.

The committee is a sort of state-appointed "arbitrator" that stands between labor groups and management in dispute and helps them come up with a joint breakthrough. If either of the two parties refuses to accept the final solution from the committee, unionized workers are legally allowed to stage a strike.

The union said it will convene a general meeting on Friday and Saturday, and then hold a vote early next week to decide whether to stage a general strike.

"We will continue to fight," said a spokesman for the union. "But if the management wants to resume talks to find a breakthrough, we will willingly cooperate."

The militant Korean Confederation of Trade Unions, the second-largest umbrella labor group of the country, said in a statement, "If Kumho Tires launches a strike, we will also join their struggle with all we have."

Most political parties are remaining silent about the dispute, but the Democratic Labor Party (DP), a pro-labor minor opposition party, issued a statement lashing out at the tire maker's management.

"The conglomerate's liquidity crunch and ensuing labor-management dispute at Kumho Tires originated from the conglomerate's ill-prepared business expansion," said Woo Wie-young, a DP spokesman.

Kumho Tires, a money-making unit of Kumho Asiana Group, has come under debt repayment programs since early January as its mother company faces a severe liquidity crunch as a result of aggressive business expansion by taking over financially ailing companies over the past years.

The financial health of the nation's once ninth-largest conglomerate was particularly damaged after its purchase of a 72 percent controlling stake of Daewoo Engineering and Construction in 2006.

In the meantime, creditors of Kumho Asiana Group proposed a new option to financial investors of Kumho's construction unit, Daewoo Engineering and Construction, to join a private equity fund launched to purchase the builder, local media reports said Wednesday.