SALEM, Va.—Yokohama Tire Corp. plans to build a 400,000-sq.-ft. distribution center next to its car and light truck tire plant in Salem. The facility will be built on 7.5 acres the city is donating to the tire manufacturer.
"This city (Salem) is a great place to do business," said Dan Hunter, vice president and general manager of consumer products for the U.S. subsidiary of Japan's Yokohama Rubber Co. Ltd.
Pending completion of the deal and approval by the state government, he said, YTC expects to finish the project in 24 to 30 months.
Mr. Hunter said the facility will allow YTC to assemble large orders from the manufacturing plant for direct shipment to a single location.
The company currently is constructing another 400,000-sq.-ft. distribution center in Barrow County, Ga., that should be ready in about four months, he said.
YTC is a partner with Continental General Tire Inc. and Toyo Tire (U.S.A.) in a joint venture called GTY Tire, which operates a commercial truck tire plant in Mt. Vernon, Ill.
In the last couple of years, Yokohama has added equipment at the Salem plant to increase capacity and broaden the number of tire lines manufactured there.
In January, YTC added a new Banbury mixer and five dual-cavity tire presses to increase light-truck tire production. In 1998 it added 17 dual-cavity tire presses to the plant.
YTC is expanding Salem's production of the Geolander H/T, its LT and sport-utility-vehicle tires, and eventually the plant will make all of that line for North America.
The company also shifted production of its Avid H4/V4 performance tire line for North America to the facility and is adding new 40-, 45- and 50-series tires in 17-inch sizes for the "street-tuner market."
Equipment installation on these two production lines will be complete in 30 to 60 days, Mr. Hunter said, increasing overall plant capacity by about 10 to 12 percent.
The Salem plant's daily production is about 25,000 units, according to Tire Business estimates, which includes more than 100 different SKUs. That supplies about 90 percent of all the consumer passenger and light truck tires YTC sells in the U.S., Mr. Hunter said, though "that is going to change."
To accommodate increased production of performance and LT tires, YTC will trim production in Salem of smaller 13- and 14-inch low-priced blackwall tires and instead source more of those sizes to the North American market from Yokohama Rubber's plant in The Philippines.
He acknowledged the percentage of Salem-produced units, as part of Yokohama's sales in North America, will drop a bit, but "won't go below 80 percent."
Salem's wide variety of SKUs leads to a large number of relatively small production runs compared with some other tire plants.
"It's one of the most complex plants in the U.S.," said Jim Hawk, vice president of manufacturing for YTC. "We're not a long-run OE (original equipment) plant."
Mohawk Rubber Co. originally built a 250,000-sq.-ft. plant in Salem in 1968. Yokohama purchased Mohawk in 1989 and has expanded the plant in several phases to its current 940,000-sq.-ft. size.
Yokohama merged its North American operations and Mohawk to form YTC in 1992 and has invested about $310 million in Salem, including purchase of the original building, the expansions and equipment, Mr. Hunter said.
Since a variety of SKUs are produced there, a single tire-building machine may be refitted for different tire sizes several times daily.
Each shift has a three-man changeover crew that moves throughout the plant to modify machinery to meet production schedules. It takes an average of about 20 minutes to modify a machine, Mr. Hawk said.
Mr. Hunter said the plant is segmented according to "pipe groups" of similar tires and the key is to get flexibility between the various production areas.
Dual-cavity presses allow the plant to use different molds on the same press—another way to produce short runs of a variety of SKUs, Mr. Hawk said. Because a mold has to cool before it can be changed, it takes four to five hours to switch a tire press to a different SKU.
At Salem, a two-person compounding lab works in conjunction with researchers in Japan to develop rubber compounds and products specifically for the North American market.
In November, YTC said it would begin producing Prodigy-brand tires for the California-based Tire Alliance Groupe in addition to the Yokohama flag brand and Mohawk associate brand.