Triangle aims to expand operation, crack top 10

Weihai, China – Triangle Group Co. Ltd., the second largest tire manufacturer in China and 15th largest worldwide, is aiming to crack the top 10 globally over the next few years, according to the firm's top executive.

Triangle Chairman Ding Yuhua laid out the master plan for expansion in capacity, product line, research and development as well as sales network during a talk at a recent ceremony in Weihai commemorating the company's 40th anniversary.

“We need to pay high attention to and contribute to the 'ground-shaking' transformation of the sector,” Ding said during his speech.

Weihai-headquartered Triangle plans to boost its total capacity roughly 20 percent to 30 million units annually over the next five years, he said. The company produces passenger car, truck and bus, and off-the-road tires and sells in 180 countries. Fiscal 2014 sales were $2.87 billion.

Included in the growth are plans to achieve smart manufacturing for 10 million units of high performance tire capacity at its Huayang, China, plant and 3.5 million radial truck tires at its Huamao, China, factory over the next three to five years.

Funding the growth will come in part from capital to be raised from Triangle's upcoming IPO on the Shanghai Stock Exchange.

The company initiated production in February at Weihai, its newest facility – a so-called “smart plant” – with 4 million units of annual capacity, and is anticipating running at full capacity by the end of May.

The new plant is one of five factories Triangle has in the Weihai area. More than 98 percent of the tires produced there can meet the dynamic balance standards set at less than 20 grams for tires 20 inches or above, and less than 30 grams for smaller tires, according to the company.

The facility, which represents an investment of more than $1 billion, touts a manufacturing execution system that keeps record of all manufacturing data from raw materials to shipping, something rarely seen in China's tire plants.

Highly automated equipment—including nine automatic storage and retrieval systems that guarantee first-in, first-out shipping—reduced the plant's employee headcount by 40 percent. RFID codes also are used to monitor the tires after they are built.

“Smart manufacturing raises the profit margin,” said Guo Zhijie, Triangle's executive vice president in charge of information technology, at the anniversary event. In 2014 the company's net profit jumped 12 percent to $157 million.

Currently a supplier with 5,200 product specifications, Triangle is broadening its portfolio to cover aviation and radial agricultural tires, hoping to roll out 151 new products in 2016.

The company boasts more than 360 patents, more than any other Chinese tire maker, with research centres in Weihai and Akron, along with a third in the pipeline in Germany.

It spent 5 percent of its revenue on research and development last year and has more than doubled the size of its research team over the past five years to 400 technicians.

Triangle has a training centre, dubbed Triangle University, under construction in Weihai scheduled to open by year-end.

China is planning to introduce tire-labeling laws, a development that has put a lot pressure on Triangle's research team, said Hu Yongkang, executive vice president of technology R&D innovation and quality management centre.

“We are above the threshold,” he said, “but we need to get better ratings to gain an edge over our competitors.”

The Weihai research centre also houses a noise testing lab.

With the growing use of electric cars, tires would become the major source for noise, said Manny Cicero, Triangle Tire USA's CEO.

“This is the most advanced tire noise testing facility in China, with great sound isolation performance,” he said. “You can hear the drop of a pin.”

Set up in January, the company's US sales arm is furthering the tire maker's foray into the world's largest and most competitive market.

“Every tire maker in the world is in the US trying to grab a piece of a very large pie. It's crowded and it's noisy,” Cicero said. “But being heard is different than selling at the lowest commodity prices.”

Pushing through the noise, Triangle is taking a branding approach centred on being “meaningfully different.”

It introduced in the US recently its first ad aimed at tire dealers, announcing the company's respect for tire dealers' independent growth. It also has hired a media veteran to remake a company promotional video that specifically targets the US market.

Once the foundation is laid, which is expected in two years, the company will refocus on enhancing the purchasing experience that helps make Triangle a sustainable brand in the US, according to Cicero.