South Korea’s Hankook Tire plans to double its European output over the next two years, bucking a trend of job cuts that has triggered labour unrest in the continent’s ailing tyre sector.

Hankook said on Thursday that it would lift output from its plant in Hungary to 10m tyres a year, investing €230m ($335m). It added that it would create 700 more jobs, lifting the workforce at its plant in the central city of Dunaujvaros to more than 1,900.

By contrast, Germany’s Continental has triggered protests with its plans to close or sell a French plant with annual output of 8m tyres; France’s Michelin, which owns 10 per cent of Hankook, has said it plans to shed 2,300 workers over the next three years; and Italy’s Pirelli plans to close its tyre plant at Manresa in Spain by the end of this year.

Hankook’s further investment in Hungary follows an announcement last year from Daimler, the German carmaker, that it was targeting production of 100,000 bottom-end cars there. Audi and Suzuki also build vehicles in Hungary.

The Korean group first announced a goal of 10m tyres in 2005 but this was postponed because of last year’s economic downturn. The company had already invested €320m in bringing production to 5m.

Hankook was hit by last year’s downturn in car sales, reporting a loss of Won3.3bn ($2.7m) in the last quarter of 2008. This year it identified robust sales increases from Hungary as a key factor in helping it return to the black. In the first six months of 2009, operating profit grew 18 per cent to Won180bn.

“We are fully on track for a second phase of investment now,” said Calvin Pak at Hankook.

Explaining the competitive advantage over European manufacturers, Mr Pak said Hankook had won quality accolades but remained more affordable thanks to less of a brand premium.

Mr Pak added the company would next expand into south Asia, for example in India or Malaysia. In the longer term, a North American plant was likely.

In a separate sign of confidence among Korean carmakers, Hyundai Motor said it would hire 32 per cent more new workers in Korea than initially planned in the second half of the year.

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