Kenda’s Stotsenburg Talks Products, Investment and Tariffs
Company is 'Reassessing its Sourcing'
Coming off a strong 2020, American Kenda Rubber Co. Ltd. continues to expand its product portfolio in several rapidly growing segments. In this MTD exclusive, Brandon Stotsenburg, vice president of the company’s automotive division, discusses opportunities that Kenda sees in different areas. He also reveals steps that Kenda is taking to mitigate the impact of potential tariffs on its passenger and light truck tires.
MTD: Can you bring us up to speed on how Kenda ended 2020 and how the company is doing in North America as we wrap up the first quarter of 2021?
Stotsenburg: American Kenda had a strong year in 2020 with double-digit increases sold through our channel partners. We also had over 100 new Traction retailers added to our channel partner program, with strong sell-out of the Kenda brand.
A lot of growth has been led by our customers embracing the second generation products designed by our technical team in Akron, Ohio.
Our new Klever A/T2 KR628 demand has been really strong and feedback from both customers and channel partners is outstanding regarding performance, particularly with 3-Peak Mountain Snowflake certification.
Consumers have been seeking Kenda as we continue to receive objective third-party endorsements for products like our Klever R/T KR601.
Despite the headwinds created by the pandemic, our real challenges were in meeting customer demand. We ended the year committing additional resources needed to support the growth demanded by our channel customers in 2021. Jimmy Yang, our CEO, continues to invest the resources to allow Kenda to grow and prosper in the North American market.
MTD: Kenda has maintained a robust new product introduction schedule and continues to gain market share - for the first time ever, appearing on MTD’s U.S. replacement tire brand share list. What product segments is Kenda focusing on in the U.S. and why? Where are the growth opportunities today and where will they be two to three years from now?
Stotsenburg: We have focused on the larger and faster-growing segments that can demonstrate our value: ultra-high performance all-season, grand touring, premium, speed-rated CUV and SUV and more recently, light truck tire segments like A/T and the expanding R/T segment.
Light truck owners are more discerning and do significant research to confirm that their tires reflect their performance needs, aesthetic concerns and their individual personalities.
Our technical center in Akron gives us strong tools to develop tires specifically for the North American consumer, based on identified needs.
We will be adding new sizes to both our Klever R/T and Klever A/T2 offerings this spring and plan to introduce a new Klever M/T in the near future.
We anticipate that the light truck segment will remain strong for growth, but there will be increasing demand in two areas.
Increasing hybrid and electric applications will change some of the performance elements for those vehicles. There will be additional needs for rolling resistance and performance driven by torque differences in most current applications. And all-weather applications will find a stronger position as engineering offers balanced solutions for wear in North America, combined with 3-Peak Mountain Snowflake certification and wet/dry performance.
MTD: When we last talked - in May 2020 - the economy was starting to reopen. You mentioned that Kenda was well-positioned to “over-index” at lower consumer tire price points. Did that turn out to be the case and what factors drove this? Will the “flight-to-value” trend continue through the rest of 2021?
Stotsenburg: In 2020, consumers tilted toward value products and price-sensitive products based on economic conditions. Kenda emphasized our value proposition - “Premium Performance at a Value Price” - with our distributors and retailers, as well as directly to consumers, through a variety of media, both traditional and digital. Orders accelerated dramatically.
We anticipate there will be a slight shift from price/value back to premium brand when the economy recovers to levels prior to COVID-19 in late-2021 or early-2022, as long as the government is able to gain consumer confidence.
However, Kenda believes that the retailer value of our brand will continue to drive our growth.
MTD: The ongoing, transpacific shipping slowdown has created many supply chain complications. How has this impacted Kenda and its ability to get the right tires to the right customers, on time?
Stotsenburg: As demand has continued to expand for Kenda and we are working hard to meet this need, supply is catching up. But the supply chain has struggled to meet demand. We are working very hard as a global company to adapt our supply chain to meet customers’ needs.
One of the biggest hurdles has been the reduced availability of shipping and 40-foot containers, in addition to port congestion related to holiday shipments that extended into 2021.
In our conversations with a broad range of supply chain vendors, there projects to be continued shortages of equipment for this summer. Additionally, as GDP increases and the U.S. government further stimulates demand for a broad range of consumer goods, there will likely be higher demand for shipments to satisfy consumer demand, regardless of production origin.
Kenda will continue to invest in best practices to optimize the supply chain situation. Despite the stresses, we anticipate that this will improve as we move through 2021.
MTD: In December 2020, the U.S. Department of Commerce assigned preliminary antidumping duties to a number of Asia-based passenger and light truck tiremakers and plans to announce its final determinations in May. What actions has Kenda taken to help mitigate the impact of possible tariffs on its business?
Stotsenburg: Based on the announced rates, Kenda is reassessing its sourcing to maintain our value proposition. We continue to submit data as required by the U.S. Department of Commerce to support our position as a value brand, not a price brand.
Kenda is moving forward with our plan to supply a complete product screen and continues to ship passenger and light truck products to the U.S. market from Vietnam, based on the parameters put in place.
Ultimately, the Kenda brand is earning a more prominent position with consumers with our brand investments and, most importantly, with our Kenda dealers’ commitment to selling the Kenda product screen.
We have many retailers who are confidently selling Kenda as a first replacement in the aftermarket. Kenda is proactive in adapting to continue building our reliance on the independent dealer as a partner.