Hankook goal: sufficient size, not just ranking

ERJ staff report (RPN)

By Bruce Davis, Rubber & Plastics News

Cancun, Mexico – Hankook Tire Co. Ltd's long-stated goal of becoming the world's No. 5 tire maker is fuelled by a desire to have sufficient economy of scale for long-term success, according to the company president.

The goal isn't an "imperialistic" drive for size, said Hyun Bum Cho, president and chief marketing officer of the South Korean tire manufacturer. He spoke to about 200 dealers, distributors and spouses at an annual conference in Cancun held by the manufacturer's US operation, Hankook Tire America Corp.

Having the proper economy of scale is crucial to the company's continued growth and profits, said Cho. A major stockholder and considered one of South Korea's 200 wealthiest individuals, he made a surprise appearance at the 18-20 Feb event.

Hankook has invested more than $2 billion (Euro 1.5 billion) in new tire capacity the past seven years—including new plants in China, Hungary and Indonesia—a commitment that should yield an expansion of global manufacturing capacities of 5 to 6 percent annually. Cho said growth of this magnitude is above global market growth projections.

Hankook wrested the No. 7 ranking from Yokohama Rubber Co. Ltd this year with fiscal 2012 sales of $6.3 billion. Yokohama, the No. 7 tire maker for the past few decades, reported fiscal 2012 tire division sales of $5.8 billion.

Ahead of Hankook in the rankings of the world's tire makers are Sumitomo Rubber Industries Ltd and Pirelli & C. S.p.A., with sales of $7.3 billion and $7.8 billion, respectively.

Both Sumitomo and Pirelli, however, have been investing heavily in new capacity and have ambitious growth plans as well.

An important cog in the firm's growth could be a US plant. Cho put the certainty of the US plant being built at more than 80 percent.

Hankook officials declined to be more specific as to the timing of the decision, saying only the project is moving forward.

In North America, Cho said Hankook envisions doubling its presence to a 10- to 12-percent market share in the coming years.

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Article from Rubber & Plastics News