Toyo Tires is Back on Track

When at the start of the year Japanese manufacturer Toyo Tire & Rubber Co., Ltd. put the brakes on expenditure in response to the global economic and financial crisis, the package of measures implemented were received with a shock: layoffs, massive budget cutbacks, withdrawal from the Tokyo Motor Show, restrictions upon travel for management and so on. Later it became public knowledge that top managers voluntarily forewent their bonuses. Since that time a collective sigh of relief has been breathed that some of the restrictions didn’t turn out to be as severe as first anticipated, and for Toyo’s factories in particular the tide has turned. "Our plant utilisation in Japan is already approaching a hundred per cent," comments Tatsuo Mitsuhata (44), executive vice president Toyo Tire Europe. The company’s Japanese competitors are somewhat lagging in this respect and their recovery not occurring as quickly as Toyo’s.

Admittedly, a complete return to the plans in place before the crisis hasn’t occurred, nor has a rapid execution of all decisions made during the darker months. The new tyre plant planned for a still undetermined location in Southeast Asia will still be built, but is construction has been postponed. Toyo’s Nitto brand, currently doing well in North America, will one day be a second brand for the whole world (including Europe), but given current weak demand such a move would at present be untimely. Instead, in Japan and Europe much attention is focused upon a project that gained very little headline space until now: Toyo, a relatively small manufacturer in comparison to some of the major market players, has received OE homologation from a premium vehicle manufacturer for its prestige models. This has placed extremely high demands upon the Toyo developers, notes Wilhelm Höppner, who since this spring has served as Technical Director of Toyo Tires Europe. Yet Höppner praises his colleagues in Japan for rising to and mastering this challenge in so short a timeframe; many of the company’s larger competitors would have experienced difficulties meeting the vehicle manufacturer’s specifications within the same period. After several niche models Toyo will also supply OE tyres to a mass market German vehicle, Mitsuhata adds. It has not been decided where these tyres will be produced.

Today nearly all tyres sold within Europe with the Toyo name on the sidewall come from the company’s Japanese factories, as the US plant’s capacity is dedicated to supplying the American market. Several months ago the presidents of Toyo and competitor Bridgestone also announced in a joint press release that a production capacity exchange is planned for North and South America, through which Toyo tyres will be produced at a Bridgestone plant and vice versa. A further factory – the Cheng Shin-Toyo Tire joint venture plant – has supplied tyres to the Chinese market, however in August Toyo announced changes to its operations in China and its plan to set up its own facility in the country. Speaking before the announcement, Höppner commented: “We retain the technology for producing high performance and UHP tyres at our two Japanese plants and our facility in the US. If tyres from our Chinese factory are exported to Europe, to start with they will only be standard tyres.”

The parent company’s April to June quarterly figures and especially the results for Europe appear to make sobering reading as it can be seen that European sales only amounted to 59 per cent of the turnover generated one year ago. These figures do not at all reflect the recent period in which Tamotsu Sakuramoto has held the position of president, Toyo Tires Europe, clarifies Tatsuo Mitsuhata. Most of the heavy deficits are attributable to the collapsed Russian and Ukrainian markets, and while Toyo Tires Europe is the parent company of the UK, German-Austrian, Italian and Benelux sales companies, Russia and the Ukraine are directly controlled from Japan. In its headquarters in Neuss, near the German city of Düsseldorf, the European operation overseeing the four sales companies may have also experienced a reduced turnover, but its levels of 85 to 90 per cent compared with last year conform with the market, comments the executive vice president. Nevertheless Toyo Tires & Rubber is disappointed, as shortly before the crisis began the company has sent a strong team to Russia and the Ukraine to establish these markets, and they have since totally collapsed. Yet Mitsuhata is looking towards the future and expects activity to occur in other markets where Toyo as yet boasts no organisation. It is too early to release further details of such moves, however.

It is the job of the 35 person strong team at the European headquarters to support its own four national organisations along with distributors in other European countries. Fortunately for Toyo its truck tyres represent only a relatively small share of business here and therefore the disastrous market conditions within the segment did not pose too strong an influence on the company’s results. The company’s UK operations particularly benefited from winning new, strong customers – Mitsuhata mentions Micheldever Tyres (Winchester) and North East Tyres & Exhausts (Middlesbrough) – and this has placed Toyo in the UK in a much better position for coming stronger out of the crisis than in other European countries.

In terms of products Toyo feels to be on the right track with, it is not only the abovementioned OE product development that is seen to be helping the company at this time. A range of innovations are placing Toyo in a stronger position, from tyres featuring the latest nano technologies through to the introduction of an environmentally friendlier tyre with a recycled material casing, the Proxes NE, from its summer tyre programme to its brand new all-season tyre range intended for introduction in 2010/2011. All are areas in which Toyo’s technical progress is showing itself, and therefore Mitsuhata is very confident about the company’s future.