Hankook Tire and Technology has stopped production altogether at its Daejeon plant after a fire burned some of the factory buildings and left severe damage, the South Korean tire manufacturer said Monday.
Although buildings in one of the two factory complexes were not damaged by the fire, a Hankook Tire official explained that the company is shutting down its operation for the day as part of safety measures.
"We don't know when the plant will resume operation at the moment," the official said.
The fire broke out at 10:09 p.m. Sunday in one of the buildings in the second factory complex at the tire company’s Daejeon plant. According to fire officials, much of the 87,000-square-meter logistics building, which housed about 400,000 tires, was burned down.
Fire authorities issued a level three alert, the highest response measure, to tame the blaze. Although no serious injuries have been reported from the fire, 10 plant workers and one firefighter have been taken to hospital. The officials announced the completion of the initial step for suppressing the fire at 11 a.m. as they confirmed that no grave dangers remained. As of 5 p.m., firefighters were putting out smaller fires.
“The company is assessing the direct and indirect losses from the fire. The cost of damage from the disaster will be announced once the amount is confirmed,” Hankook Tire said in a regulatory filing.
According to the company, the tire maker’s Daejeon site has a package insurance plan worth 1.7 trillion won ($1.3 billion) with four local insurance companies. Hankook Tire said the amount of the insurance coverage will be determined after the insurance firms’ damage assessment.
The plant, which is capable of producing between 40,000 to 45,000 tires per day for a wide range of vehicles including buses, passenger cars and trucks, will take some time to return to normal operations. In the meantime, Hankook Tire plans to fill in supply gaps by utilizing additional manufacturing and production capacity elsewhere.
The Korean tire maker operates eight manufacturing sites -- two in Korea, three in China and one in Hungary, Indonesia and the US. The fire-damaged plant in Daejeon accounts for about 20 percent of its total global production. About 35 percent of tire production at the Daejeon plant is supplied to domestic automakers, while 65 percent is exported.
A Hankook Tire official said the company is in the process of reviewing backup plans for the loss of the Daejeon plant’s operations.
“We still have a long way to go to figure out the cause of the fire, as the authorities have not yet completely extinguished it,” said the official.
An official at Hyundai Motor Group, a major customer of Hankook Tire, told The Korea Herald that Hyundai has checked its inventory and will have no problems with tire supply. The official added that Hyundai is drafting countermeasures to prepare for any possible hiccups in tire supply.
The incident marks the second fire at Hankook Tire’s Daejeon plant in nine years. In October 2014, the same factory building caught fire, resulting in an estimated 6.6 billion won worth of asset damage and over 180,000 destroyed tires.
Hankook Tire became the sixth-largest tire manufacturer in the world by sales in 2020.
The stock price of the Korean tire maker closed at 34,500 won per share on Monday, down 5.99 percent from Friday.