Kenda Chairman Discusses Demand, Shipping and Tariffs
Yang Expects Double-Digit Growth in 2022
As chairman of Kenda Rubber Industrial Co. Ltd., Jimmy Yang oversees a multinational operation that includes offices in the United States, Europe and the company’s native Taiwan; seven manufacturing plants - including one in Taiwan, one in Indonesia, two in Vietnam and three in China; and a North American subsidiary, American Kenda Rubber Co. Ltd., that continues to gain market share.
Kenda’s 2021 global sales totaled $1.25 billion. (Approximately 35% percent of Kenda’s revenue last year was generated by its North American operation.)
During a recent event at Kenda’s North American Technical Center near Akron, Ohio, to celebrate the company’s 60th anniversary, Yang sat down with MTD to discuss Kenda’s growth. He also discussed how Kenda has responded to the shipping crisis and tariffs. And he addressed tensions between Taiwan and China and how they could impact Kenda.
MTD: Demand for tires in North America exploded across all product segments in 2021. Do you see that continuing?
Yang: During the pandemic, demand for all kinds of tires - bicycle tires, motorcycle tires, passenger and light truck tires and outside equipment tires - shot up very high. Kenda enjoyed very strong growth in 2021. Kenda had record high sales.
We forecast the market will continue to be strong. In the last few years, we’ve put so much investment in branding, marketing and product development (in North America.) The image our team has created - premium products at a value price - is working well. The quality and performance of Kenda tires (have been) well-received by consumers.
MTD: Are you planning to make further investments at your passenger and light truck tire plants? (Editor’s note: Kenda ships replacement passenger and light truck tires for the North American market from one of its two plants in Vietnam.)
Yang: Our Vietnam factory will continue to grow. We have a 20,000-unit-a-day capacity. Today, we are at 60% capacity. So we will (fill) that remaining 40% … by the end of 2022.
MTD: Supply disruptions and elevated shipping costs have been a major topic of discussion among MTD readers. What’s your take on the situation? Has it affected Kenda’s ability to get products to its North American customers?
Yang: Our manufacturing in Asia was not (initially) disrupted by the pandemic. But without (shipping) containers, it made it difficult … as tires were produced and piled up at factories. You can’t continue to make tires if you have nowhere to store them. So that hurt production.
And shipping costs are probably five to six times what they used to be. In the good old days, it cost no more than $4,000 to ship a box from Asia - whether it was China, Taiwan or Vietnam - to the United States. Now you have to pay $20,000 or more for containers. Every tire we import from Asia has to bear (additional freight costs.) So this has made imported tires much more expensive. And I don’t see that easing up anytime soon. But now at least shipping capacity is more available. We can now get the shipping space. We can book containers. But the cost is still very high.
We used to rely on a few major carriers. Anytime we needed it, capacity wasn’t an issue. Prices were very reasonable. Now we are forced to deal with more carriers. We have opened business with carriers we did not have a relationship with (previously.) We’ve tried to grab as much shipping space as possible and we’ve had a good degree of success. Companies are providing us with additional shipping space. It’s under better control today.
MTD: Last year, the U.S. International Trade Commission applied countervailing duties to passenger and light truck tires coming into the U.S. from Taiwan, plus South Korea, Thailand and Vietnam. What impact has this had on Kenda’s business?
Yang: Trade wars across the world seem to be constant. It’s not just America and China. It’s Europe and China. It’s India and China. In the past, our factories in China were a very important part of our manufacturing base globally. (Tariffs levied on passenger and light truck tires made in China) forced Kenda to move some of our production from China to Taiwan.
In 2021, the anti-dumping tribunal (in the U.S. levied) substantial duties against South Korea, Taiwan, Thailand and Vietnam. So we were already branching out capacity into our Vietnam factory. That put Kenda in a better position. And the factory (in Vietnam) is the newest factory for Kenda automotive tires. Before the duty was imposed … we were already in production. Our factory is doing really well and will meet the growth generated by our team.
MTD: We continue to hear reports about tensions between Taiwan and China. Does that concern you? What steps is Kenda taking to protect its interests?
Yang: That’s something that’s a very sensitive issue. Kenda has been very happy investing in China. We set up our first factory in China in 1990. Kenda was one of the earliest (tire) companies to invest in China. We have a lot of friends there.
Will there be conflict? It’s hard to predict what may happen. We have to prepare ourselves… with our factories in Indonesia and Vietnam and also continue expansion in Taiwan. And depending on the situation, we have long-term plans that we may eventually have to expand our tire manufacturing capabilities in North America and also Europe.