USW, Giti Tire at odds over PPP funding, job cuts

RICHBURG, S.C.—A non-profit group and the United Steelworkers union are blasting Giti Tire (USA) Ltd. over the acceptance of millions of dollars in federal COVID-19 relief, saying the tire maker wasn't qualified for the funding.

Giti, meanwhile, is defending its acceptance of the federal aid and asserting that it continues to invest in the South Carolina economy through expansion and job creation.

Central to the dust-up is nearly $8 million in federal Paycheck Protection Program funding awarded to the company's Richburg site, which shuttered for several weeks early in the pandemic. Another $2 million went to Giti's operations in California, detractors said.

In spite of this funding, which was designed to keep employees on the payrolls during the COVID-19 slowdowns, the USW claims that the tire maker permanently laid off employees.

"Giti's abuse of pandemic aid is appalling, though not surprising," Daniel Flippo, USW District 9 director, said in a statement. "This company betrayed the public trust long before COVID-19."

Giti claims that the PPP funding did exactly what it was supposed to do. It allowed the tire maker to keep employees on the books.

"As for our Giti Tire team, the sudden impact of the pandemic forced us to suspend operations and furlough employees in early April of 2020," the company said. "Following the furlough, we applied for the PPP funds. Thankfully, we were able to use PPP money to begin bringing our team members back in May 2020, despite the uncertainty of market demand for tires due to widespread stay-at-home orders."

By the end of August, Giti said it had brought back all eligible furloughed employees. While some of them have declined to return, the tire maker said it continues to maintain employment levels company-wide through hiring and training programs. This includes adding workers in production areas.

This claim is in direct conflict with allegations made by Flippo, who said that "Giti still threw an estimated 100 workers out of their jobs."

Now, a report from the Americans for Financial Reform Education Fund alleges the tire maker should not have needed the PPP funding at all, calling Giti a prime example of misguided Paycheck Protection Program funding.

"We've been spending a lot of time thinking about the extent to which the COVID stimulus program has been benefiting larger firms and oftentimes at the expense of small businesses. And this is essentially true of the PPP program," said Patrick Woodall, senior researcher and writer at AFREF.

Woodall authored of the newly released report, "Where the Rubber Meets the Road—How a Global Tire Titan Got Millions in Pandemic Small Business Loans." In it, he paints a picture of small businesses, especially those owned by women and people of color, being squeezed out of PPP funding by large firms, especially early on when the money went fast. By the time more PPP money came along, it was too late for some small businesses, Woodall said.

"Lots of Main Street businesses just have never had that kind of access to support."

Giti described the allegations that it inappropriately diverted funds from small- and minority-owned businesses as "outrageous," "disappointing" and "misleading."

"As our country begins to emerge from this devastating pandemic, it is disappointing to see outside, third-party organizations try to take advantage of the situation," Giti said in a statement. "The allegations against us are misleading and mischaracterize the situation."

The report claims the Giti plant, as part of a larger global tire company, should not have received PPP funding because it had the support of the larger corporation and therefore could have made it through the financial downturn without additional support.

"We know that many, many independent small businesses that weren't affiliated with a global, Singapore-based tire manufacturer with some 30,000 employees, they were not able to access the program," Woodall said. And that raises the question of "whether or not the small business credit was being provided equitably."

Giti said it fairly received money from the PPP program, a move that allowed it to bring workers back sooner.

"Giti Tire fully qualified for the PPP support and those funds allowed us to bring back our employees starting in May 2020, much sooner than would have been possible without the PPP money."

The USW created a separate website, greedygiti.com, to highlight the report issued by the AFREF.

"Giti accepted $60 million in tax breaks to build a plant and then broke its promise to create 1,700 jobs for the community," Flippo said.

He claims Giti never came close to hiring 1,700 for the South Carolina factory. When the pandemic hit, Flippo claimed Giti permanently laid off many of the workers it had.

Giti said tying the issue of PPP funding to the incentives to build the plant is a red herring.

"Economic development incentives do not have anything to do with the PPP money," the tire maker said. "Such incentives are given to qualifying companies when they choose to locate in a state and/or county. These are two separate topics."

The stakes in the PPP bout go far beyond the $8 million in funding received by Giti in South Carolina through the pandemic-related program.

Giti has invested $560 million in the tire plant with a promise to create the new jobs in exchange for a package of financial incentives to locate in Richburg.

Giti, in pushing back against the criticism, indicated the company continues to work toward creating the necessary jobs.

"We are disappointed to see outside, third-party organizations make inaccurate allegations during this time of national crisis, but the facts support our operations," the company said. "Our $560 million investment has generated more than 500 jobs, with a goal to fulfill the job creation requirement by 2024."

The 1.7 million-sq.-ft. plant has been an economic shot in the arm to South Carolina, generating 5,000 direct and indirect jobs translating into a $1.2 billion impact in the region, the company claimed.

"With all of this positive impact and potential, it's even more important we stay focused on recovering from the pandemic and supporting our employees, producing high-quality tires and investing in our local communities," the company said.