Yokohama: Chinese competition a challenge
Yokohama Tire Manufacturing Mississippi (YTMM) LLC, the new manufacturing subsidiary of Yokohama Tire Corp., officially broke ground on its new commercial truck tire manufacturing plant in West Point, Miss., this week and company executives are evaluating industry trends in order to move forward.
“The reason for putting more production in the United States is not just for the U.S. market,” says Takayuki Hamaya, CFO and COO of Yokohama Tire Corp.
“Yokohama’s total capacity is too small for worldwide demand and opportunity. A big percentage of our commercial business is in the U.S., and is growing. Worldwide, the U.S. market is our biggest opportunity for growth.”
Hamaya says that with both consumer and commercial tires, Yokohama is concerned about the influx of Chinese tires into the U.S. market since the expiration of Tariff 421 in September of 2012. That influx is affecting consumer purchasing, and that is a long-term concern for the company.
“Chinese brands are coming into the U.S. market and the price level is coming down. Cheap tires are coming in and the second tier and third tier brands are reducing their prices to compete with the Chinese product. Then the second tier and first tier have to adjust also.”
According to Andrew Briggs, Yokohama director, marketing and product planning, the company is also concerned about U.S. consumer buying habits.
“It’s troubling to see the consumer focus on price more than anything else,” says Briggs. “The Chinese manufacturers come in and lower the price. If the consciousness of the U.S. consumer remains only on price, not about quality, that’s a long-term concern for Yokohama.”
“People see these cheap tires and they’re black and round, so it is usable under normal conditions,” says Hamaya. “But if heavy rain comes they don’t stop as quickly as a Yokohama tire and other major brands.”
Hamaya says only a small segment of Yokohama’s commercial dealers also carry Chinese tires.
“Our main customers are not buying Chinese tires. We are going to focus on keeping our customers. Our customer mix is better than the actual market mix.”
Hamaya says Yokohama is committed to investing more in the U.S. market. It’s not comparable to anything Yokohama has done in the past.
“We are going to produce 1 million TBR tires per year, 3,000 pieces a day, every day. The first tire comes out October, 2015, and then it will take two more years to get to full capacity. This is the point where you will see a big difference between Yokohama in the past and in the future.”
For more on YTMM see: