Federal closes plant; Nankang takes minority stake

TAIPEI, Taiwan — Federal Corp., an independent Taiwan tire maker since 1954, lost some of that independence last year when fellow Taiwan tire maker Nankang Tire Corp. acquired a 31.4% stake in Federal, which had suffered a 72% drop in sales in 2021 in the wake of the U.S. imposing elevated import duties in 2020 on consumer tires from Taiwan.

The loss of business in the U.S. also forced Federal to close its original tire factory in Zhongli, Taoyuan Province, and consolidate all production at its remaining plant, the 7-year-old factory in Guanyin, Taoyuan.

• This article appears in the 2022 Global Tire Report.

The company took a $13 million earnings impairment to cover costs associated with the closing and earmarked $7.5 million to cover severance pay for workers displaced by the plant's closing.

The company's directors also put up for sale properties Federal held in China, including its idled tire factory in Jiangxi.

Federal posted a $67.6 million fiscal 2021 operating loss on sales of just $57.1 million.

The net result was a loss of $86 million, according to figures presented in the firm's fiscal 2021 consolidated financial results.

Federal's sales volume in the U.S. dropped 82% in 2021 from 2020 to $10 million, according to the document, which noted that Federal was dealt an antidumping duty of 84.75% by the U.S. Commerce Department.

Prior to 2021, Federal had generated 25% or more of its annual revenue from business in North America.

At the same time, the Federal Corp. earnings report noted that Ching-Hsing Chiang, chairman of Nankang Rubber Tire Corp. Ltd. since March 2020, took over as chairman of Federal's board in October 2021 and president of Federal Corp. on Nov. 1, 2021.

More than a dozen tire companies from South Korea, Taiwan and Thailand, including Nankang Rubber, petitioned the U.S. Department of Commerce in August to review import duties the U.S. imposed on passenger and light truck tires from those nations in June 2021.