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Shandong Linglong Tire update

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Shandong Linglong Tire update

At 42, Feng Wang is one of the youngest CEOs in the tire industry. But his rise to the top at Shandong Linglong Tire Co. Ltd., one of China’s largest tire manufacturers, didn’t happen overnight.

Armed with a degree from prestigious Shandong University, he joined Linglong in 1993 as a factory worker. He was promoted to plant supervisor, then manager before he started to climb the corporate ladder.

“I understand tire production all the way to management,” he says. “Knowing how factory workers think helped me learn how to manage them.”

His from-the-ground-up perspective makes Wang (pronounced “Wong”) uniquely qualified to oversee the $2 billion company and its four manufacturing plants. Three are in China; one is in the later stages of construction and producing tires on a 132-acre site in the Royong Province of Thailand, less than 100 miles east of Bangkok.

In an exclusive interview with Modern Tire Dealer at the LLIT (Thailand) Co. Ltd. plant in August, Wang outlined his strategy to turn Linglong into an upper tier tire brand around the world.

MTD: Please break down your Chinese tire production for us. How many units do you manufacture annually?

Wang: We have three plants in Mainland China. Two are in Shandong Province, one near our headquarters in Zhaoyuan and the other in Dezhou. Our third plant is in Guangxi Province.

Our plants in China have the capacity to produce about 44 million PCR (radial passenger and light truck) units a year. About 40 million of that comes from Zhaoyuan. We also can produce 10 million radial truck tires annually, and about 1.5 million bias tires, which include trailer tires, some small diameter golf cart tires, some light truck tires and about 200,000 industrial tires.

Our other two Chinese plants are still under development. When they are completed, we will be able to produce 65 million PCR tires in China.

About 50% of our production is for domestic use. Our plan for the future is 70% of our total production will be dedicated outside of China.

MTD: Your new radial plant in Thailand is already up and running. How many tires will the plant produce in 2014? What will its eventual capacity be?

Wang: The plant will produce 8 million PCR tires and 600,000 radial truck tires this year. When all the phases are completed, it will be able to manufacture 12 million PCR tires and 1.2 million truck tires.

MTD: Where will the tires produced in the Thailand plant be allocated?

Wang: The Thailand factory is dedicated to outside of the China market. We could export tires to any country, although if a new tariff on Chinese exports is implemented in the U.S., we may export 100% of the production to the United States. For the long-term plan, that could change. For Linglong, the long-term strategy is to compete in a global market. The most important thing is we want to develop such a brand that’s recognized globally by everybody.

MTD: Are you planning to build more plants?

Wang: Yes. By the end of 2020, we will have a total of six tire factories. We are still investigating which areas or which countries we will build them in.

MTD: Is building a plant in the United States possible?

Wang: Anything is possible. We have three places we are investigating now for our second factory outside of China. One is in America, one is in Mexico and one is in Brazil.

MTD: When will a decision be made?

Wang: Probably by the end of this year, we will have some idea in which country we’re going to build our fifth plant.

MTD: You sell tires in 160 countries. How much of your production is exported to the U.S.?

Wang: The U.S. accounts for about 26% of the total exports. Europe represents about the same. Exports from China account for about $1 billion, half of our total sales.

Right now, the U.S., in total, accounts for a quarter of the total value. But the plan in the future is hopefully to be more than 33%, so one-third of our total exports will be dedicated to America. The American market is very important for us.

MTD: Is supplying original equipment tires to vehicle manufacturers part of your strategy?

Wang: Right now, we’re doing business with GM in China and also Ford in China. We are in discussions with other car companies on several projects. One of them is with Renault in Russia. We are also talking with GM and Ford in America and GM in Korea. In China, we are in the planning stages with Volkswagen and Fiat. The majority of our OE business will be the Linglong brand.

MTD: What percent of total production is the Linglong brand, and what other brands do you produce?

Wang: In total, 75% of our tires are Linglong. That includes our Crosswind and Green Max lines, although Green Max is only sold in Europe. We also own and manufacture Infinity, Liao and Atlas brands. Linglong, Liao and Atlas are available in America, Infinity is not. We have one other PCR brand, Shanling, which is only for domestic use in China. We also offer a radial trailer tire brand, Provider, in America.

Horizon Tire, our primary marketing arm in the U.S. since 2004, is the exclusive distributor of Linglong and Crosswind in the U.S. Atlas Tire LLC (based in Copley, Ohio) is wholly owned by Linglong.

[PAGEBREAK]

MTD: Are you involved in any green initiatives, including low rolling resistance technology?

Wang: Linglong has spent a lot of resources in that area. We are doing three things. We have invested in technology, such as special tire compounds for greater fuel efficiency. We have improved our current building equipment. The third is the management: Everything we do, including our new and old factories, we are doing with environmental initiatives in mind.

MTD: How many research and development facilities do you have?

Wang: Our center of development technology is in the Zhaoyuan factory. By the end of the year, we will have 10 engineers there. Our other factories have engineers and technicians who are also involved in the R&D.

In addition, we’re in cooperation with a couple of companies that help with tire compounding. One of them is in Germany (Lanxess AG, specialty chemicals).

MTD: Do you plan to build a technical or R&D center in the U.S.?

Wang: Yes, we are planning to have a U.S. tech center.

MTD: Do you own your own test track?

Wang: We are building a massive, state-of-the-art test track at the Zhaoyuan factory area. Next year, it will be finished.

MTD: What message do you want to send to those involved in the U.S. tire distribution channel?

Wang: Number one is we all have to face the anti-dumping duty from China. We want to work together with Horizon Tire to face that problem. Second, Linglong is developing into a globally recognized brand. For the American market, the products we sell will be tailored to American consumers. They will be based on American market demands and requirements. We want Linglong to be an American-market recognized brand. We want people looking for the name.

We are putting a lot of attention on satisfying American demands such as consumer awareness about advanced green technologies like low rolling resistance and SmartWay verification. Currently, we already have SmartWay-verified products being marketed in the U.S. via Horizon Tire.

Wherever the second Linglong plant outside of China will be, we have to integrate consumer thinking with what the factory is manufacturing. It’s not just a factory building its own tires. Our people have to meet the consumer requirements.

My main goal is building a global brand, which encompasses brand, quality and service. It’s not just quantity, but it’s the quality of the brand that’s most important to me.     ■

Linglong Tire profile

Name: Shandong Linglong Tire Co. Ltd.,

Founded in: 1975

Ownership: privately held (12 shareholder companies)

Headquarters: Zhaoyuan, China

CEO and president: Feng Wang

Plants: 4 (three in China, one in Thailand)

Brands: Linglong, Infinity, Liao (truck), Atlas, Provider (trailer tires), Shanling (China only)

Consumer tire plant capacities

When running at full capacity, Linglong Tire’s four plants will be able to produce millions of passenger and light truck tires, broken down as follows:

Province/Country                         Annual capacity

Shandong (Zhaoyuan)/China              40 million

Shandong (Dezhou)/China                 10 million

Guangzi/China                                  15 million

Royong/Thailand                               12 million

Total                                                77 million

 As of 2014, the four plants can produce 52 million radial passenger and light truck tires annually.

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