Tire tariff jolts Ford supplier

Thursday, September 17, 2009

Tire tariff jolts Ford supplier

Korean firm with factories in China weighs options to keep outfitting F-series trucks

Bryce G. Hoffman / The Detroit News

Few things scream "American" louder than Ford Motor Co.’s F-series pickup, but some models of the best-selling vehicle in the United States sport tires made in China.

And that means Chinese tire makers are not the only ones scrambling in the wake of President Barack Obama’s new tariffs.

Hankook Tire supplies the base tires for the Ford F-150. It is not a Chinese company, but a Korean manufacturer with factories in China. 



That still means that tires produced at those facilities, including those for the F-150, will be subject to the 35 percent tariff that goes into effect on Sept. 26.


"We can’t just pass that on to Ford, but we also can’t give up another 35 percent," said Hankook spokesman Bill Bainbridge. "We’ve got to have some important discussions with our significant customers about what we can do."

Ford is Hankook’s most significant customer among the domestic automakers in the United States.

The Korean manufacturer supplies tires for between 7 percent and 8 percent of Ford’s cars and trucks.

Ford would not comment specifically about how the tariffs might impact its relationship with Hankook or its margins on the F-150.

"We’re certainly continuing to look at the situation and determine the impact," said Ford spokesman Todd Nissen. "We’re not going to speculate on any potential actions we may or may not take."

He said Hankook is one of five companies that supply tires for the F-150.

Obama announced the sanctions Friday, responding to a complaint by the United Steelworkers that accused Chinese producers of dumping cheap tires in the United States. China says the tariffs violate World Trade Organization rules.

Chinese tires can be found on products from most manufacturers, and some U.S. tire brands produce some of their products in China. Those, too, will be subject to the tariff.

Hankook is the seventh-largest tire manufacturer in the world and became Ford’s first Asian tire supplier in 1999. In addition to its factories in Korea and China, it produces tires in Hungary.

Bainbridge said Hankook is weighing its options. He said it could shift production for U.S. products from China to its factories in Korea and send non-U.S. business to those facilities. However, he said that will take time.

"We’re all still in a bit of shock about the speed at which this happened," he said.

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