Hankook Tire & Know-how Co. has accomplished the growth of its Tennessee plant, the corporate’s North American manufacturing hub, and has begun preparations for full-scale mass manufacturing. The corporate plans to steadily enhance manufacturing and enter “full operation mode” subsequent 12 months, with the objective of sourcing roughly half of its North American gross sales regionally.
Based on business sources on Dec. 11, Hankook Tire is conducting trial manufacturing on the expanded manufacturing strains at its Tennessee plant. It is a course of to test for any points with the brand new manufacturing gear and to confirm compliance with tire high quality requirements, marking the ultimate stage earlier than getting into regular operations. Following trial manufacturing, the corporate plans to supply its “preliminary batch” this month and steadily enhance manufacturing quantity to achieve 100% capability utilization by the tip of subsequent 12 months.
This growth represents a core challenge that Hankook Tire has been pursuing to strengthen its North American operations. When all expanded strains are absolutely operational, the annual manufacturing capability for passenger automotive and lightweight truck tires (PCLT) will double. Contemplating the present manufacturing capability of 5.5 million items yearly, the overall capability will double to 11 million items. The brand new strains will even be able to producing as much as 1 million truck and bus tires (TBR) yearly, bringing whole manufacturing capability to 12 million items. This initiative goes past merely rising native manufacturing quantity to diversifying the product portfolio.
The North American market represents a key market, accounting for 23.3% (631 billion received) of Hankook Tire’s tire enterprise income (2.707 trillion received) within the third quarter of this 12 months. North American tire income elevated 21.9% from 1.92 trillion received in 2017, when the Tennessee plant was accomplished, to 2.34 trillion received final 12 months. Nonetheless, native manufacturing accounts for under roughly 25% of gross sales. Seventy-five p.c of North American market gross sales quantity is imported from crops in Korea and Indonesia. The corporate expects this growth to extend the native manufacturing ratio to round 50%. Accordingly, the corporate anticipates minimizing tariff burdens amid the U.S.-led protectionist commerce insurance policies. Hankook Tire partially offset tariff burdens by way of measures comparable to elevating North American tire gross sales costs within the third quarter, however nonetheless incurred prices of 27 billion received.
Native sourcing can be anticipated to cut back logistics prices and shorten lead occasions (the time from order to supply). This may present benefits in increasing collaboration with main North American automakers primarily based on competitively priced, high-quality merchandise, securing new enterprise alternatives comparable to supplying tires for brand spanking new automobiles. Hankook Tire is at present in discussions with native firms relating to tire provide for electrical vehicles and buses.
Trade consultants consider that by way of this funding, Hankook Tire will pursue “killing two birds with one stone” by rising manufacturing of high-value-added merchandise comparable to high-inch and eco-friendly automobile tires to broaden market share and improve profitability within the North American market. North America is a area with distinct preferences for sport utility automobiles (SUVs) and hybrid vehicles. The proportion of 18-inch and bigger tires in Hankook Tire’s passenger automotive and lightweight truck tire income (primarily based on North America) additionally elevated from 52.8% within the third quarter of final 12 months to 55.8% within the third quarter of this 12 months.
Hankook Tire’s international manufacturing community restructuring can be anticipated to speed up. With the growth of the Tennessee plant, the corporate plans to cut back exports to the US and deploy the provision capability of its Korea and Indonesia crops to focus on different markets comparable to Southeast Asia, Africa, and the Center East. The technique includes redistributing the roles of worldwide manufacturing bases to enhance manufacturing effectivity and set up a steady revenue basis.
An business insider acknowledged, “Hankook Tire’s Tennessee plant growth seems to be a strategic funding to proactively reply to modifications in international market demand,” including, “It’s anticipated to speed up progress within the North American market by enhancing native manufacturing competitiveness whereas maximizing international provide chain effectivity.”
