Hankook sets sights on ‘top tier’
While in Korea for Hankook Tire’s announcement of new OE fitments, MTD had the opportunity to spend time with Seung Hwa Suh, vice chairman and CEO of Hankook Tire Co. Ltd.
In an open and frank discussion, Suh shared his views about a number of key issues for Hankook as the company moves forward. He addressed a variety of issues:
* How close Hankook is to being a “top tier” tire company;
* The need to improve the image of the Hankook brand so the company can launch a second brand to help it grow;
* Pending announcement of a U.S. tire plant;
* The plans to grow company-owned distribution worldwide through T’Station and Masters programs;
* The social responsibility of the company;
* The need to outpace world-wide tire growth;
* Mergers and acquisitions by the company; and
* Hankook’s change of status at OE.
On becoming a “top-tier” tire company:
“We have yet to join the top tier, but by 2020 we will be there. We will not stop working until we achieve this goal,” Suh said. He believes that the new OE fitments on world-class vehicles will help the company move in this direction.
“By supplying foreign car makers, we became a serious supplier. In terms of quality, we are a top-tier company right now. We still recognize that our company size and brand must be improved.”
Throughout the time MTD spent in Korea, talk of being a top-tier tire company was mentioned in many conversations.
On launching “associate” brands:
“We are thinking of associate brands as we are too heavily involved with the Hankook brand right now. But, in thinking of introducing a lower position brand, we must make the Hankook brand higher in the minds of everyone,” Suh said.
On a U.S. tire plant:
As reported earlier this year in MTD, Suh confirmed that the company will make an announcement about a plant in Tennessee, Georgia or South Carolina by year’s end. Negotiations with those three states are ongoing. Capacity could range between five to 10 million units upon completion.
On company-owned stores and franchise growth:
During the OE press conference held earlier, Hankook’s President and Chief Marketing Officer Hyum Bum Cho said the company currently has 4,400 stores across the globe with the desire to have 7,700 stores by 2017. Suh said that the company is working on a program for franchise stores in the U.S. through its Masters program (but the company states that is not in the near-term).
Hankook has company-owned and franchised retail stores in Korea by the name of T’Station. In the rest of the world, the franchise stores go by the Masters name. Hankook says it has no plans to have company-owned stores outside of Korea.
On social responsibility by the company:
“We must create jobs and maintain jobs and we must make a profit to pay taxes so the government can use those taxes to help people. The more profit we make, the more jobs we have and the more we can help people.”
On the need for outpacing worldwide tire growth:
Last year, Suh says the worldwide consumption of tires stood at 4.5 billion units. He feels the average growth rate stands at 4.5%, or 60 million more units per year. To achieve the growth Hankook wants to have, Suh says they must grow its capacity by six million units per year.
On mergers and acquisitions by the company:
Suh says that Hankook has a very conservative culture. But, he doesn’t rule out acquisitions. “If we did something, it would be related to the car industry.... Hankook worldwide is always looking for opportunities.” Suh did make clear that nothing was under review at the current time by Hankook.
On Hankook’s change of status at OE:
Suh shared a lighter moment in looking back to the first OE fitment call that was made in the U.S. The company was trying to meet with Ford for a temporary spare in 1997. Suh laughed and shook his head at the difficulties in arranging the first meeting. “It was very difficult. Now, we are being approached to supply the leading car companies in the world.” And Suh smiled at the change. ■