Workers at Cooper Tire’s China JV strike to protest takeover by Apollo Tyres
31 Jul 2013
Nearly 5,000 Chinese workers at Cooper Tire's joint venture in China have gone on strike in protest at the American parent company's $2.5 billion takeover by an Indian firm, reports quoting a union leader said today.
Cooper Tire and Rubber announced last month that Apollo Tyres of India, would be taking over its China operations, making the combined group the seventh-largest such firm in the world, the PTI report said.
However, thousands of employees at Cooper Chengshan, a joint venture in the eastern province of Shandong, have walked out in protest, saying the takeover cost could endanger their jobs. They also expressed concern about cultural problems with future Indian bosses.
The workers' union intends to block the transaction, which led to a sharp rise in Cooper shares on the New York stock exchange.
Yue Chunxue, director of the Cooper Chengshan union branch, accepted that the ambitious demand might not be achievable but they could at least express their unease and demands hoping to draw the support of the media to successfully block the deal.
Yue added, if they were successful they would be very happy, but if they failed, they hoped at least they could negotiate and win more benefits and safeguards.
Employees in China have become increasingly vocal of late, but the cause of the Cooper Chengshan strike was unusual, with protests normally focusing on pay and working conditions.
With the acquisition of Cooper, Apollo would get access to US market for replacement tyres for cars, as also light and medium trucks.
According to Apollo, $2.5 billion in new debt would be raised to fund the deal, of which $450 million would be serviced by its India business, while $2.1 billion would be covered through bank loans or bonds.
Cooper Tire & Rubber Co has a 65 per cent stake in the Chinese company while the remaining 35 per cent belonged to China's Chengshan Group. The joint venture was set up in 2006.
Chinese workers at the joint firm fear that their interests might be harmed with acquisition as they suspected that the Indian firm would not be able to repay the debt.
According to Che Hongzhi, board chairman of the Chengshan Group, the large debt raised by Apollo would probably make it extremely difficult for the company to invest its profits in future production, in a possible reference the joint venture's financial strain and ensuing closure.
The announcement of the acquisition led to Apollo losing a third of its market value within two days, as investors frowned over the debt it would take on to fund the deal.
