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Hankook addresses supply shortages at its 2008 dealer meeting

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Dealers concerned with a lack of Hankook tires didn't have long to wait for some answers at the 2008 Hankook Tire Dealer Meeting in Paradise Island, Bahamas.

Hankook Tire America Corp. executives admitted to experiencing some major fill-rate problems in the fourth quarter of last year. Greg Pae, president of Hankook Tire America Corp., said the situation has been "challenging" for the company. "We are working hard to make some improvements."

Thanks to a new plant in Hungary and expansions at existing plants, Hankook's tire production capacity will exceed 73 million tires annually by the end of the year, "two years ahead of schedule."

In 2007, Hankook's tire capacity totaled 68.78 million tires. The Hungary plant, Hankook's fifth worldwide, began production in August 2007. It produced just under one million tires last year, but will ramp up to five million tires annually in 2008, according to Pae.

(Hankook is looking at building a sixth plant, although no details on possible locations were available. "Stay tuned," Bill Bainbridge, director of brand communications, told the dealers in attendance.)

Hankook plans to continue to supply tires to original equipment manufacturers. Worldwide, OE tires represent 25% of Hankook Tire Co. Ltd.'s mix.

The OE business "cannot displace our replacement business," said Pae. "We only accept new fitments when we have the capacity," added Dan Wheeler, director of dealer programs.

Hankook Tire America also is reducing its emphasis on DFC (direct factory container) distribution and focusing its attention on distributing through its domestic warehouses. Officials said this will help the company supply dealers more efficiently and equitably.

The DFC program will still be used for truck and ultra-high performance tires.

When a new, 200,000-square-foot warehouse in Chicago is completed, Hankook will have more than 1.5 million square feet of warehousing in the United States.

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