Playing catch-up: Yokohama opens second OTR plant. Forty percent of production will go to U.S.
“We’re part of history, boys,” said Rick Williams, vice president of Miller Brothers Giant Tire Service in Tampa, Fla., during the grand opening of Yokohama Rubber Co. Ltd.’s second OTR tire plant in Onomichi City, Japan.
Williams was one of three independent tire dealers from North America to attend the ceremony, which also included representatives from equipment manufacturers Caterpillar Inc. and Komatsu.
Ltd. Construction of the new Onomichi facility began in February 2006. (Onomichi is the only place in which Yokohama produces OTR tires.)
Yokohama has invested $35 million in the new plant. Plant Manager Toshi Kamibayashi told attendees that the new plant will produce 8,000 units per month with 80% of the capacity built for foreign customers.
The new plant is designed to produce small- to mid-size radial tires with rim diameters of 25 inches, 33 inches and 35 inches for use on wheeled cranes and dump trucks of the 30- to 75-ton class.
Toru Kobayashi, , director and corporate office for Yokohama Rubber, said Yokohama is planning a $50 million investment in future expansion at the factory starting later this year. The increased capacity will be for super-large tires (up to 57 inches) for use on dump trucks in the 100- to 250-ton class.
Further, the company plans to expand capacity to include tires for mid-sized to large industrial vehicles in the 30- to 100-ton class, a segment the company says is rapidly growing.
As for 63-inch tires, Kobayashi said that Yokohama is studying the market, “but it’s not in the package for us right now.”
Yokohama chose to build its new plant in Onomichi because “we already have a strong technology and research and development presence at our existing plant here,” said Henry Sakurabayashi, division general manager for Yokohama’s OTR and Aircraft Tire Divisions.
The company has not ruled out future production expansion at an overseas facility, but that won’t be explored until at least 2010.
‘Into the mainstream’
Kobayashi told Modern Tire Dealer that 40% of the Onomichi facility’s OTR production is slated to go to the U.S.
Gary Nash, director of OTR tire sales for the company’s Yokohama Tire Corp. subsidiary, reported earlier this year that major OTR tire manufacturers could each have as many as 20,000 tires on back order.
He said supply has caught up somewhat, with his company currently experiencing a 12,000-unit back order situation. Nash added that supply of large and extra-large OTR tires is still tight and make up the majority of back orders.
Kobayashi said Yokohama wants to increase radial tire production in Onomichi to 40%. But the company plans to continue increasing bias OTR production since there continues to be high demand for bias tires at open-pit and underground mines.
Dealers who attended the opening were impressed by the new plant. “This will make Yokohama a bigger player and help their dealers receive more production,” said Williams. “They’ve been a niche player and now they’re moving into the mainstream.”
“Any time there’s more supply, it’s better for the industry,” says Rocky Williams, OTR operations manager for Parkhouse Tire Inc. in Fontana, Calif. “There are key sizes being built that will alleviate some of the shortage.”
Walt Sudderth, OTR sales manager for King’s Tire Service in Bluewell, W.Va., said he believes Yokohama “is trying to be responsive to the needs of the industry to the best of their ability.”
Commenting on the extremely short supply of certain OTR tire sizes, Sudderth said the time from when the pending shortage was first discussed until it actually hit was only a month.
“Until that time, OTR tire manufacturers weren’t making a decent profit in products; they weren’t going to expand capacity. It’s taken time for new production to come on-stream.”
Yokohama’s OTR tire production increase is part of the company’s Grand Design 100 program, which calls for growth in sales from present-day totals of $5 billion per year to $10 billion per year by 2017, Yokohama’s 100th anniversary.