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."