Hankook Refines Growth Strategies for the U.S. Market
In European countries, Hankook is positioned as a first tier brand, and my vision in the U.S. is to achieve that goal.” This one short sentence by Hankook Tire America Corp. President Hee-Se Ahn set the tone for the company’s Partner’s Day meeting held last month in Liberia, Costa Rica.
Shawn Denlein, senior vice president of sales for Hankook, outlined the company’s growth and branding efforts in North America to 87 key dealers who were in attendance.
Denlein said the company increased its share of the U.S. market to 4.3% in 2015. In a separate interview with Modern Tire Dealer (MTD,) Denlein said the company is expecting to outpace the industry during 2016 and is looking for double-digit growth this year. Denlein said sales were $1.2 billion in the U.S. and just under $100 million in Canada in 2015.
Hankook’s parent company reported its sales in North America grew 20% last year with sales of its UHP tires up 29% over the year prior, accounting for 33.3% of its total revenue.
In total, the Americas represent 22.1% of the parent company’s total output, up from 20.8% in 2014. This makes the region the company’s second largest market, with only Europe being larger at 30.6% of the company’s total sales.
Denlein says Hankook is the seventh largest tire company worldwide and the company wants to be the fifth largest company by 2018. “In the face of challenges in 2015, we grew in a very meaningful way,” said Ahn. He told dealers it was his company’s “responsibility to help you (dealers) succeed. I cannot say that 2016 will be any easier than 2015, but with determination and hard work, anything is possible.”
The consumer recognizes quality and value and Ahn said Hankook’s dealer partners in other countries have come to look at the brand as the most successful one for them to handle. Ahn, who has been in the U.S. for just over a year, told MTD this market “is different than any other market around the world. Especially, the independent tire dealer is stronger (in size and importance).
“We cannot adapt strategies from other countries and apply them to the U.S. We must develop strategies for here,” Ahn said.
Hankook noted 35% of its U.S. sales are to the OE level. Denlein said the company has focused on premium OE fitments with the belief this will increase its brand awareness with consumers.
The company is continuing with its Major League Baseball (MLB) signage program. In 2015, Hankook had agreements with 26 major league teams and the company plans the same level of investment in 2016. In addition to the behind the plate signage, Hankook also has begun outfield wall signage with five teams.
Denlein said the company will continue to use social media to increase awareness of its baseball program. The company also plans to continue its “Never Halfway” advertising program, which was designed for the U.S. market. This is a departure from its previous program, “Be One With It,” that was designed for multiple countries.
The company also is increasing its involvement with DAV (Disabled American Veterans) dav.org for 2016. Hankook is sponsoring four mobile vehicle stops across the U.S. where veterans can get assistance. Hankook also is supporting two MLB military appreciation games during the year.
Tire production update
On the product front, Hankook is expanding its Kinergy GT H436 grand touring tire to include additional replacement sizes. The new sizes will be available in the second quarter. The tire was introduced last year and is replacing the H426 in the company’s lineup. The new tire will be available in H- and V-speed ratings, 40- to 65-series, in 15-inch to 19-inch sizes. The UTQG rating will be 540/A/A.
Later this year, the company is introducing the Winter Icept i22 (W616). This tire will come in 45- to 70-series, in 13- to 18-inch rim diameters and in 37 sizes. It will be available for dealers for the upcoming winter season.
Denlein said the company’s first U.S. plant in Clarksville, Tenn., is on schedule to begin production in the fourth quarter of this year. The $800 million plant will produce passenger and light truck tires.
The first phase will have a capacity of 5.5 million tires per year, with a second phase doubling that capacity. Future plans are for two more phases for a total potential production of 22 million units per year.
Hankook operates seven plants worldwide with a capacity of 104 million units per year. It has two plants located in China with a combined capacity of 33.7 million units.
Hankook’s parent company will open a new worldwide R&D center in Korea later this year. Called the Technodome, the facility will house 100 labs with more than 300 workers.
No mention of the company’s Laufenn tire line was made during the meeting; however, Denlein told MTD the sales goal for Laufenn is to be 8% of the company’s sales in 2016. He said the positioning of Laufenn is to go after the value segment of the market. And the company had previously announced plans for a dealer council in 2015, but those plans have been delayed. Denlein hopes to have a council in place by the end of 2016.
Hankook currently has 200 employees in the U.S. with 40% of those working in the sales area. ■
Bobby Valentine: managing by the three ‘Rs’
Bobby Valentine, the former Major League Baseball manager for the Texas Rangers, New York Mets, and Boston Red Sox, was the guest speaker at Hankook’s dealer meeting. His comments offered a refreshing approach to management.
“The most unfair thing you can do is treat different people all the same way,” he said. Valentine made it clear that he dislikes the approach of “treating all the players the same way — that is complete bunk! I had Nolan Ryan on my staff. Do you think I would treat him the same way as a rookie?”
He told dealers the key to getting a winning team is to know who is on the team and find a common bond to link them. And that is hard, he noted. Valentine said a good manager must understand what his reputation (what others think about you) and character (what you think about you) are and bring them to the mix.
He summed up his management beliefs with the three “Rs.”
Responsibility — You must embrace it, he said. Have everyone write down just three things they want to accomplish every day. You don’t even have to review what was written down with them. Imagine if everyone who works for you did this. That would mean they could accomplish 21 things per week.
Respect — You must respect the people you work with and, most of all, respect your competitors, he said, because they want to eat your lunch.
Reality — We are all in this together. Nobody can conquer the world, but you can conquer your space, said Valentine. Figure out what it is that you think you do well, and then do it.
And then, with a laugh, Valentine told the audience that he didn’t have all the answers. After all, he had been fired many times as a manager. He even had the distinction of being fired while at Texas by the then managing partner, George W. Bush, who he said is still a friend.