Kolon Industries Inc., a South Korean tire cord producer, has halted its production line in Nanjing, China, due to the local government’s land development plans.

During a first-quarter earnings call on Wednesday, the company said that it suspended operations at the Nanjing production line at the request of the local government in January this year. Production has since been relocated to its factory in Vietnam, it said.

Kolon Industries also said it is considering expanding its Vietnamese facilities to make it a hub for tire cord production by 2024.

“The Nanjing government requested the closure of the factory due to its land development policy and we had received numerous requests to suspend production by January, so the decision to close the factory was inevitable,” said a company official.

Fortunately, Kolon Industries completed the expansion of its tire cord factory in Binh Duong, Vietnam, in September last year, which can now cover part of the production that was previously made in China.

Tire cord is a fiber reinforcing material that maintains the shape of a tire skeleton and is essential for tire manufacturing along with rubber.

Kolon Industries, which specializes in tire cord production, has three manufacturing sites in Gumi, Korea, Nanjing, and Binh Duong.

The annual production capacity of the Nanjing plant was 31,200 tons, which accounts for one-third of the company’s annual output. The annual production capacity of the Gumi and Binh Duong plants is 36,000 tons each.

Other Korean companies operating production lines in Nanjing are also paying close attention to the news of Kolon Industries’ factory withdrawal.

LG Energy Solution Ltd., LG Display Co., and LG Electronics Inc., which have factories in Nanjing, said that they have not received any requests from the local government.

LG Energy Solution supplies batteries produced at its Nanjing factory to Tesla Inc.’s Shanghai plant. It is planning to launch energy storage system (ESS) products by converting some of its production lines into lithium iron phosphate (LFP) battery factories by the end of this year.

LG Display operates a module factory that handles post-processing assembly of information technology products and liquid crystal display panels. LG Electronics produces electric vehicle components in Nanjing.

By Jung You-jung and Minu Kim

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]