Kumho Tire Co., South Korea's second-biggest tire maker, shut down its office in the southern city Sunday amid a prolonged strike over a new pay system.

Unionized workers began an all-out strike on Aug. 17 after failing to agree with the management on adopting a wage peak system that would allow them to extend their retirement age in exchange for a capped salary.

"As the union's all-out strike continues, we decided to close the office," said a Kumho official, speaking on condition of anonymity. "If the union expresses its will to stop the strike, we will reopen the office."

Negotiations between the two sides have failed to produce a breakthrough due to differences over the lump-sum amount the company will pay the workers in compensation for the adoption of the wage peak system.

Losses incurred to the company have been estimated at 89 billion won ($75 million), while the average loss for each worker is expected to exceed 2.5 million won.

During the first quarter, Kumho Tire saw its sales drop 12 percent on-year to 754.4 billion won, with operating profit plunging 49 percent to 44 billion won. (Yonhap)