LOS CABOS, Mexico (Feb. 9, 2009)—Hankook Tire Co. Ltd. has postponed plans to construct a sixth tire factory in response to the slowdown in original equipment and replacement tire demand.
Greg Pae, president of Hankook Tire America Corp., said the parent company had decided that the timing wasn't right for another tire factory. He said about 25 percent of Hankook Tire's business is from OE customers, and slumping U.S. car sales coupled with record raw material costs have impacted the parent company's profit margins.
Last month the South Korean tire maker said it saw its 2008 operating earnings halved to $103.6 million, and recurring profit had dropped 98 percent to $3.1 million despite a global sales increase of 26 percent to $3.69 billion.
Pae said it was “difficult to say” when the proposed factory would be revisited, but he hoped that economic conditions would improve in two years.