Automobile and truck tire maker Federal Corp (泰豐輪胎) yesterday said that it has shut a factory in Taoyuan’s Jhongli District (中壢), as it has lost substantial orders following a steep anti-dumping tariff imposed by the US.
Federal Corp’s decision came after the US Department of Commerce on May 24 ruled that Taiwanese tire manufacturers have to pay anti-dumping tariffs of 20.04 to 101.84 percent.
Federal Corp faces a duty of 84.75 percent on tire exports to the US, up from a 4 percent levy on local suppliers in the past.
Photo: CNA
Cheng Shin Rubber Industry Co (正新輪胎) has tariffs of 20.04 percent and Nankang Rubber Tire Corp (南港輪胎) faces the stiffest penalty of 101.84 percent, the department has said.
“The anti-dumping duty has severely affected the company’s operations. Considering the levy’s threat to the company’s survival, the board of directors approved the proposal to close down the Jhongli plant entirely to safeguard shareholders’ interests,” Federal Corp said in a statement submitted to the Taiwan Stock Exchange.
Federal Corp expects the ruling to have a severe effect on its US orders and revenue, as more than 80 percent of the tires made at the factory are exported to the US, the statement said.
The Jhongli plant contributed about 27 percent to the company’s revenue of NT$549 million (US$19.85 million) in the first quarter, Federal Corp said.
The plant has installed capacity of 1.8 million tires a year, it said.
To cut costs and squeeze out more cash, Federal Corp has submitted an application to lay off a lot of workers, the company said.
It also plans to auction the Jhongli facilities and land, it said.
It has laid out a long-term business strategy to recoup lost exports to the US, while stepping up collaboration with overseas original electronics manufacturers to circumvent the duty, it said.
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