New plant to facilitate Nexen’s global OE plans

Nexen Tire’s new factory in Changnyeong, South Korea has entered service, and according to Joo-Ho Song, senior managing director, global marketing at Nexen, the facility will play a key role in the tyre maker’s ambitious plans. Output at Changnyeong will initially be a modest 3 million units in 2012 and will build up, aided by five planned further factory expansions, to 21 million units – 60,000 tyres a day – by 2018. By that date, Nexen says it will have invested a total of 1,200 billion won (£650 million) in the plant.

Housed within the 495,800 square metre factory buildings is an assortment of some of the latest tyre building equipment, supplied by a number of the world’s most respected machinery manufacturers. Nexen management anticipate that the new passenger car and light commercial vehicle tyre factory’s highly-automated operation will produce world-class high performance, eco-friendly tyres – precisely the sort of tyre the Korean firm must produce if it is to fulfill its stated ambition of entering the tyre making ‘top ten’ by 2020.

At the turn of the decade, when – if all goes to plan – Nexen takes its place within the global top ten, the tyre maker expects to be producing 80 million tyres per annum in Changnyeong and at its plants in Yangsan, Korea and Qingdao, China. This may seem a lofty target, given the company’s current output of around 27 million units, however Byung-Woo Lee, executive vice-president of Nexen’s Sales Division commented that this is “only ten million more every year.”

Lee added that a good proportion of this additional output will be sold in the original equipment sector, where Nexen’s volumes are increasing. At a recent event at the Changnyeong facility, Mr. Song discussed Nexen’s original equipment sector ambitions in greater detail – he said the tyre maker sees OE business as one of two crucial avenues it can take to further establish the Nexen brand’s credibility.

“Two things are important to growth – OE business and magazine tests,” he said. “Both are important to establishing Nexen’s reputation for quality. We have to get more OE business and perform well in magazine tests to establish further brand credibility.”

Song shared that Nexen plants to grow its global original equipment business by a 23 per cent compound annual growth rate (CAGR) to 2015, at which time it will account for 8.2 million pieces.

Look out for further details of Nexen’s new Changnyeong facility and the company’s plans for the coming years in Tyres & Accessories magazine and at tyrepress.com.