Kumho Workers Accept Restructuring Proposal
In a vote held on April 21, unionised workers have accepted Kumho Tire’s proposed restructuring plan, including a cut in wages and bonuses. According to information published by the Wall Street Journal, the agreement paves the way for a 10 per cent reduction in salaries for 2010 and a further five per cent reduction before Kumho Tire’s exit from a debt-rescheduling programme in some two to three years’ time. In return, Kumho has withdrawn plans to lay off or outsource around 1,200 workers.
“We welcome the union’s approval as it will help creditors proceed with a workout plan for the company,” said company spokesman Kang Gyu-jin. KDB, the main creditor of Kumho Tire and parent company Kumho Asiana, indicated willingness to inject 100 billion won (£58.5 million) into the tyre maker upon union acceptance of the deal. This is cash that is sorely needed – Kumho Tires’ 2009 financial information shows a net loss of 776,168 million won (£454 million), some 287 per cent more in the red than the previous year and a loss 3,190 per cent greater than in 2007. Kumho Tire has not reported a net profit since 2006, when it earned 970 million won (£575,500 in today’s money).