Hankook Tire America Corp. intends to achieve $800 million in sales this year and wants to surpass the $1 billion mark by 2011, Greg Pae, the company's president, told tire dealers earlier today, Feb. 5, during a meeting in Los Cabos, Mexico.
Here's a transcript of Pae's speech, starting with comments on the past year, which he called "unpredictable""
"The U.S. economy saw gigantic losses in jobs, banking, mortgages and investments. As we all know, the automotive industry was especially hard hit as new car and light truck sales plummeted.
"In December, the National Bureau of Economic Research confirmed what many suspected: that the United States, the world's largest economy, had been in a recession for over a year.
"In the tire industry, all manufacturers faced the challenges of unprecedented increases in the cost of raw materials and surges in the cost of energy that dramatically effected both tire production and distribution.
"From a global perspective, in spite of these challenging circumstances, Hankook Tire continued to grow. In fact, we were able to increase our global sales by 5.1% to a record $3.7 billion.
"Hankook will continue to make appropriate investments that support our ambitious growth strategy to take advantage of expanding markets around the world.
"In the U.S., our total tire sales were up 6%, topping $700 million for the first time. Our largest gains came in the UHP, touring, light truck and medium truck segments.
"It is with great appreciation that I thank you for your loyalty and your continuing partnership with Hankook. Because of your efforts, the demand for Hankook tires continues to grow.
"Let me assure you that as we begin 2009, we remain committed to delivering high-quality products and marketing support, which can make the difference between surviving and thriving in this challenging economic environment.
"Our product line coverage is already among the best in the industry and we're constantly adding new sizes to ensure you have Hankook tires for first replacement applications.
"We've expanded our warehouses and developed the new Web-based order system to reduce your administration time and improve customer service.
"In summary, we intend to earn more of your business by being a better and more efficient supplier, by managing costs and increasing productivity.
"Let me take another moment or two to tell you about a couple more of Hankook's investments. When it comes to technology, Hankook is gaining more recognition every day as a global technology leader by continuing to invest more than 5% of its annual revenue in research and development.
"In regards to our manufacturing capacity, in 2008 Hankook's five tire plants combined produced more than 73 million tires. Our tire plants are among the finest and most automated in the world. And this year we expect to build five million additional tires, for a total of 78 million by the end of 2009.
"We are making these investments to ensure the performance, safety and comfort of our tires remain comparable or superior to the top brands in our industry.
"At the same time, we recognize our responsibility to be an environmentally friendly manufacturer that keeps consumer neds at the forefront of product planning and development.
"In addition to our investments in technology and manufacturing, we are continuing to invest heavily in increasing our brand awareness. Last year, we announced new investments in cable network broadcast advertising, Internet promotion and merchanidising.
"Let me assue you that in these key marketing areas we're not 'one and done.' In fact, we're enhancing our 2009 media plans to include some 'regionalization' that we think will directly impact Hankook retailers.
"Over the last few months, I have read a number of articles and forecasts from tire industry analysts predicting that the OE tire segment will remain down because of the continued decline in new vehicle sales and the downturn in the economy.
"Replacement sales are also forecast to decline in 2009. However, as Hankook dealers, you are ideally suited to ride out this down market. Consumers will still need to replace their tires over the next year.
"Many customer who are used to buying first tier brands will be willing to spend extra time to find the same quality of tires while spending less. For these customers, Hankook is the obvious choice. For this reason and others, I believe you and I should be very optimistic about our business potential, despite the current economic situation.
"In fact, my goal is for Hankook to achieve $800 million in sales this year and surpass the $1 billion mark by 2011. To accomplish this, we'll need your continued support."