June 17, 2014
Giti's Tan: Balance capacity and free trade
Enki Tan, executive chairman of Giti Tire Group, said the company’s U.S. strategy will be to increase the capability of Giti’s supply chain, and to be closer to customers in the U.S.
Following the announcement that Giti Tire Co. Ltd. will build a U.S. plant in Chester County, S.C., Enki Tan, executive chairman of Giti Tire Group, shared his vision of the company’s future in the U.S. market.
“Over the years in the U.S. we have been approved by many big retail chains and they appreciate the quality of our product, the value that they bring and the proposition that they can get from our product,” Tan explained.
“It really supports the market and that creates the demand. Our customers know that we are in it for the long-term so when we develop a series of products we make them with high quality. We’re not here to make a quick buck; we’re here for the long-term and they appreciate that.”
Tan said initial production will be five million PCR and LT tires per year, or 30,000 per day. No dates have been set yet as to when production will begin, or if it will increase in time.
“We’ll see what the market is like over the next few years and we’ll decide as we go along,” said Tan.
“The production will be mainly for the U.S. and Canada markets. Mexico is possible if an OE company requests it but right now the current plan is U.S. and Canada. We’ll be making the brands we sell in the U.S. right now which is GT Radial, Primewell and Dextero. The Runway brand is a possibility later but we’re just going to make three brands for now.
“What we look at is the whole value chain. Automation is one part of it; the manufacturing is one part of it, the logistic costs of shipping raw materials and shipping finished goods. There is time to market; there are the value-added products that we can manufacture in this country. We look at a whole series of tangible and intangible aspects of manufacturing and automation is just one part of it.”
Tan said he has three main concerns in the global tire industry. First is volatility in raw material prices, especially natural rubber, because it causes a “whiplash action” in the value chain. Second is overcapacity in some areas.
“The other one is protectionism; we see that creeping in in some areas. The tire industry creates a lot of jobs and it is a conduit to many other industries around. If the tire industry closes down in one area the impact is much larger than the number of jobs it loses. That creates protectionism. You need a balance of capacity creation and free trade.