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EC offers Hankook aid for Hungary plant

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BRUSSELS (March 13, 2014) — The European Commission has authorized $80 million in regional investment aid to Hankook Tire Hungary Manufacturing & Trading Ltd. for the expansion of its tire plant in Rácalmás, Hungary.

The commission said it found that the measure “favors regional development while limiting the distortions of competition brought about by the state aid.” It is in line with the commission’s guidelines on regional aid, in particular with the rules on large investment projects.

Parent company Hankook Tire Co. Ltd. announced in May 2013 its approval of the third phase expansion of the plant, committing $400 million over two years to boost capacity for car and light truck tires by 42 percent.

In announcing the EC’s decision, Joaquín Almunia, vice president, competition policy, singled out Hankook Hungary’s intent to create 950 new jobs at the plant.

“It will provide a welcome boost to the development of the region without unduly distorting competition in the single market,” Mr. Almunia said.

The EC noted the region where the plant is located, the central Transdanubia, is an area of high unemployment eligible for regional aid under European Union regulations.

In December 2013, Hungary disclosed plans to support the project with a direct grant of $33 millio and tax allowances of about $46.5 million. The state aid is based on existing aid schemes, the EC said, but had to be assessed by the Commission, because high aid amounts carry a higher risk of distorting competition.

The Commission’s investigation found that Hankook’s passenger and light truck tire market share in the European Economic Area and world market will stay below 25 percent after the investment and the production capacity created by the investment remains below 5 percent of the market.

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TB Reader Poll

Previous | Published January 28, 2016

Titan International and the United Steelworkers union have petitioned the U.S. International Trade Commission and U.S. Department of Commerce seeking relief from OTR tire imports from China, India and Sri Lanka. What’s your opinion?

I wholeheartedly support their action – something needs to be done.
46%
(36 votes)
I think it’s a bad idea that could inevitably tie the hands of domestic tire makers.
13%
(10 votes)
I oppose any duties against tire importers—they only raise costs for distributors and make it harder to obtain inventory.
24%
(19 votes)
I’m kind of on the fence and not sure what’s right, but need more information before deciding.
14%
(11 votes)
I don’t really care whether or not relief is granted.
3%
(2 votes)
Total votes: 78