[넘버스]Kumho Tire, CEO Jeon Dae-jin, needs a trick

Let’s interpret business, economy and technology in Numbers. Numbers are a source of information. Information is open to anyone, and numbers can be seen by anyone, but not everyone has an eye to see the truth behind it. A story of numbers so that everyone can relate <넘버스>Let’s solve it easily.

From the beginning of the year, Dae-jin Jeon, CEO of Kumho Tires, has a heavy heart. This is because in 2018, he established a confrontation with the union of the company who elected himself as the first CEO of Kumho Tires under the double star system.

On the 19th, Kumho Tire’s union announced the breakdown of collective wage bargaining (those negotiations) with the management and is currently applying for mediation of the labor dispute. It means that we will go on strike soon.

This is △ 5.34% increase in wages due to the occurrence of operating profit △ Guarantee of total employment △ Standard reset for 200% of bonuses returned in 2019 through a special agreement signed between labor and management on April 2, 2018 after the acquisition of Double Star in China △ Normal wage (Bonus) This is a result of the management’s rejection of the labor union’s request for bargaining between the past and the future for the lawsuit.

The management is in the position that it cannot accommodate the demands of the union due to management difficulties. The company has turned to a deficit since the first quarter of last year due to the coronavirus and recorded a large deficit in the second quarter as well as the global economic downturn, slowing consumer sentiment, and factory shutdowns.

The union is angry. Since the sale to Double Star, for the past two years, the company has kept its promise of no dispute only to normalize the management of the company, and it has even turned into a quarterly profit through the efforts of employees including the union, but the attitude of the management refusal to distribute profits is completely unacceptable. There is no position.

In addition, I am not a little disappointed that even the former CEO, who believed that he would measure their position better than anyone else, is showing a move that is not so different from other CEOs.

I wouldn’t be comfortable with being a representative. The current Kumho Tires union is the people who believed in and supported them by raising themselves as the CEO. Nevertheless, the reason why Kumho Tires cannot accept the demands of such unions is because the circumstances of Kumho Tires are not as good.

Like the union’s claim, Kumho Tire has made a surplus in the double star system. From the second quarter of 2019 to the fourth quarter, it turned to profit for the third consecutive quarter. But that’s all. Shortly thereafter, as the corona pandemic struck, Kumho Tires was making a loss from the first quarter of last year to the third quarter of last year.

Kumho Tire’s cumulative operating income for the third quarter was negative (-) 9.9 billion won. Among the three companies, including Hankook Tire and Nexen Tire, are recording operating losses. During the same period, NEXEN TIRE made a net loss of 11 billion won, but it is only a tenth of that of Kumho Tire’s 108.8 billion won. In addition, the recent issue of anti-dumping tariffs in the United States has resulted in the union’s demands for management.

That’s why we can’t just watch the union’s strike promotion.

Inside and outside the industry, if the union strikes, there is a lot of room for a conflict between Kumho Tire’s labor-management conflict and the conflict between the major shareholder Double Star, the Kumho Tire union, and the Korea Development Bank, a creditor. It is an analysis that there is a high possibility that the old conflict that has endured only for the normalization of business for the past three years will be revealed.

In the case of Double Star, Kumho Tire’s sluggish performance can be used as a reason to draw out a manpower reduction card. When Double Star acquired Kumho Tire in 2018, it made a promise to the Korea Development Bank that it would not reduce artificial manpower for three years. However, if the strike is enforced, it could lead to massive restructuring this year, when the promised three years are over.

The union, which opposed the acquisition of Double Star, is highly likely to act hard. In particular, the fact that the investment of 200 billion won, which was promised to pass three years after the acquisition, was not executed, and that the Chinese subsidiary’s performance improvement using the distribution network of large shareholders was not achieved.

In fact, Double Star only paid 6463 billion won in purchases of its 45% stake to become Kumho Tire’s largest shareholder, and has not made any investments so far.

The resurgence of the Chinese market through the use of the Double Star distribution network is still a dream. The Chinese subsidiary is Kumho Tire’s major customer. Since 2010, it has made direct and indirect investment worth about 800 billion won, of which 750 billion won has been invested in the Chinese subsidiary. However, as competition in China intensified, the Chinese subsidiary’s performance went downhill and its market share gradually declined. At the time, KDB pointed out that China-based Double Star was the right person to lead the normalization of Kumho Tire’s Chinese subsidiary.

But after three years, nothing has changed. Even Korean companies, Hankook Tire and Nexen Tire, are making surpluses in the Chinese market, but only Kumho Tire, which is called’Chinese descent’, is making a deficit in China. Hankook Tire and NEXEN TIRE’s cumulative net profit and loss for the third quarter of their Chinese subsidiaries amounted to 53 billion won and 8.8 billion won, respectively, while Kumho Tires posted a net loss of 20.5 billion won over the same period. As losses increased, the debt of each Chinese subsidiary increased metallurgical and metallurgy, and the situation of’Kumho Tire China’, which had been in a state of capital erosion before the acquisition as Double Star, has not improved at all.

Not only this. Recently, double-star tires sold domestically through Kumho Tires were ordered to be recalled (defective compensation) from the Ministry of Land, Infrastructure and Transport for violating the safety standards for durability performance, which hurt Kumho Tire’s brand image. The labor union is also in an endless situation when it comes to quarreling with major shareholders, management, and Sangeun.

As Kumho Tire stands at a crossroads of catastrophe, it seems that the role of CEO Jeon Dae-jin is more important than ever.

In fact, there have been many words inside and outside the company about the faint presence of the former CEO. Despite the fact that the company did not ask for investment from the largest shareholders even with a surplus for the third consecutive quarter, he was a former managing director at the China Production Technology Headquarters, but the Chinese subsidiary’s performance was poor even though he had led the business in China. There were many skeptical views of his competence over what he didn’t even do.

Maybe now is a good opportunity for the former CEO to reveal his presence. We look forward to the incredible tricks of CEO Jeon Dae-jin to prevent the catastrophe between labor and management.