Demand may exist for new US plant, says Yokohama
Yokohama is considering switching some of its existing tyre production from an undisclosed location to North America. In a mid-year company/industry report released by Yokohama Tire Corporation, senior vice-president Dan King stated: “We’re always looking at matching our supply and demand, and that means evaluating capacity increases and allocation changes. We’re looking at all those possibilities, including pulling allocation from one area of the world and bringing it to North America.” King commented that further consumer capacity increases are still under evaluation at Yokohama, and a new US plant may result from this. He did not specify what sort of tyres would be produced in a new North American plant, however the senior vice-president noted that despite higher production costs in the US, the company would have the advantage of being close to the market and be able to service its accounts in a “more efficient” way. “It’s a balancing act between costs and benefits, but our plan is to constantly evaluate building new plants for the future,” said King.
Existing capacity expansion work at Yokohama Tire Corporation’s passenger car tyre plant in Salem, Virginia is also “definitely on target,” King reported: “We’ve been able to get more production each month than we had originally planned.” This expansion work will aid in alleviating supply shortages. Dan King observes that demand remains high in the original equipment segment, and although replacement market demand is showing signs of levelling off this year King says it is expected to see industry growth next year, in 2013 and 2014. “It’s going to have an impact on the industry’s capacities, and we are addressing that with the Salem expansion and a major expansion in the Philippines. We’re looking at other parts of the world, as well.
“For Yokohama specifically, we feel very good because our demand is high,” the senior vice-president continued. “We’ve always prided ourselves on working closely with our customers and having very strong fill rates, but we haven’t been able to do that right now. We are increasing our supply and bettering our fill rates, and we expect this to improve even more next year.”
An even greater gap exists between supply and demand in the commercial vehicle tyre segment, King added. “The demand on the OE commercial side is well above expectations,” he said. “The replacement side was extremely strong, but has levelled off a little. Our demand versus our ability to supply now is a much bigger gap than we’re comfortable with, so we are trying to get as much product as we can flowing through. Any product that hits the dock goes to our warehouse and is immediately moved to the customer.”
Business wise, King said it’s been a “good year” for Yokohama: “We have very strong demand,” he stated. “We’re not always going to be the biggest supplier, but we strive to be the best and most efficient. We want our customers to love selling our product and to have confidence in us. That’s why we’re working so hard to eliminate the fill rate situation.” King also noted that raw material prices have to an extent blunted the competitiveness of cheap imported tyres: “Raw material cost increases have been significant, and those impact every manufacturer, including the Chinese. They’ve had to re-evaluate how they price in the US. There have also been issues with duties – the Chinese and Thailand tariffs. Those have had an impact on pricing in the US as well.”
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