WAYNE, N.J. (Oct. 31, 2005) — Hankook Tire Co. Ltd. will build an estimated $600 million factory in Hungary as a base for its production entry into the European market.
Hankook selected Dunaujvaros, Hungary, about 42 miles south of the Hungarian capital of Budapest, as the site of its new plant and base of its stepped-up efforts to pursue the European markets. The factory will have an annual capacity of 10 million units, many of which will be ultra-high performance tires. It is slated to start operation in 2007, with a completion date in 2010, Hankook said.
The tire maker plans to employ 1,500 at the plant, which it said will be constructed on a 5.69-million-sq.-ft. site.
South Korea's largest tire maker held the investment signing ceremony at its headquarters in Seoul. Dignitaries attending the event, hosted by Hankook CEO Cho Choong-hwan, included Janos Koka, the Hungarian Minister of Economy and Transport; Abel Garamhegyi, Deputy State Secretary, the Ministry of Economy and Transport; Istvan Torzsa, the Hungarian ambassador to Korea; and Investment AttachÃ&Copy; Kamilla Sandroca.
The majority of the tires that will be produced in Dunaujvaros will supply Europe, where Hankook said its exports accounted for 36.8 percent of $862 million in total exports last year. The projected exports to the European market are estimated at $400 million this year.
With the construction of a Central European plant, Hankook said it is hoping to resolve problems stemming from the European Union's powerful economic block and the dangers of exchange rate fluctuations. The company also is expecting a reduction in its manufacturing and logistics costs.
In 2008, Hankook's annual production volume will reach 70 million units, which the company said would establish it as one of the world's top-five producers following such global players as Group Michelin, Bridgestone Corp. and Goodyear.
Hankook Tire currently makes more than 58 million tires a year from two plants in Daejoen and Gumsan in South Korea, and two plants in Jiaxing and Jiangsu, China.
With the construction of the new plant, Hankook said it will be equipped with a full-blown global production system linking Korea, China and Hungary.
“The company has been reviewing possible plant sites in Central Europe including Poland, Hungary, the Czech Republic and Slovakia to supply products to the European markets, which has the highest proportion of Hankook Tire's exports,” a company press release stated. “In the end, Hungary had the edge over the other candidate countries in terms of logistics and production costs, skilled workers, accessibility to Western Europe and pro-active government cooperation.”
Hankook said it recently set up a local corporation in Hungary.