Hankook pledges increased product capacity
Soo Il Lee, president of Hankook Tire America Corp., addressed Hankook tire dealers at the company’s Partner’s Day 2011 event at the Riviera Nayarit in Mexico.
He reported that last year, Hankook’s global sales increased by 23% compared with the year before, reaching $4.7 billion. The company sold 81 million tires, an increase of 14%.
Hankook Tire North America (U.S. and Canada combined) recorded sales of 12.6 million tires, totaling $1 billion in sales with a growth rate of 21%.
However, he said, fill rates were a problem. “In 2010, our stock levels were quite low, at times having only one month’s stock, making it almost impossible to meet sufficient fill-rates."
While the company’s stock level is “not expected to increase suddenly, given the fact of the unfavorable global supply situation,” the company is “going to find the best way to utilize our stock in the most effective way possible,” Lee said.
To be a leading global tire company by 2020, the company plans to “try our best to meet your needs by increasing our product capacity.
“Our company recently revealed an ambitious investment plan to build two new large tire factories; one in China and the other in Indonesia. Upon completion of these facilities we will be able to produce more than one hundred million tires per year globally,” Lee said.
“Also, in the long run, we will eventually need a factory on the American continent, as well.”
This year marks Hankook’s 70th year in business, and its 30th year in the U.S. It is now the seventh largest tire company in the world, Lee noted.
In 2011, "New challenges and opportunities are ahead of us,” said Lee. “The global economic crisis which hit two and half years ago is getting somewhat better but still casting its shadow over the business in general.
“Manufacturing costs of producing tires is skyrocketing, because of this there will be substantial prices issues within the tire industry. On the other hand, there could be other demand issues if oil prices keep trending up as they did four years ago.
“On the positive side, though, the automotive industry is seeing positive gains, even though it’s still far behind its peak of years past. Nevertheless, this will directly help our future business,” he said.
“Also, consumers are beginning to understand the importance of well-engineered and well-made tires which gives us both unique opportunities and challenges. I believe, however, that we, as partners, will have a chance to use these trends as the key factors of our success by meeting consumers’ needs in the area of value, quality and service.”
“Second, beginning this year, we will take aggressive, yet smart marketing approaches to enhance our brand equity. We will increase our marketing investment by more than 75%.
“With this great brand investment, we will implement holistic marketing activities, ranging from MLB home-plate signage to motorsports, TV commercials, consumer magazines, and more. This will help introduce consumers to our brand, get to know our products and recommend Hankook to others. All of which will help successfully grow your business.”
Lee also pledged to enhance communication between the company and its dealers.