For the next 10 years, Yokohama Rubber Co. Ltd. plans to increase its overall sales by launching new high-performance, truck and bus tires, and by expanding its production capacity in Japan and Asia.
Hisao Suzuki, Yokohama's second highest executive, sat down with Tire Business at Yokohama headquarters in Tokyo to discuss the tire maker's future-including a 10-year strategic plan the company calls ``GD10''-and how it's performing currently. Integral to GD10 is Yokohama's goal to reach $3.8 billion in sales by 2005 and an operating profit of $297 million, said Mr. Suzuki, who is representative executive director and president of the tire group.
An essential part of the company's overall health is dependent upon its North American unit, Yokohama Tire Corp. (YTC), based in Fullerton, Calif. In Yokohama's three-year corporate plan (2002-2005), YTC will focus on expanding its HP and Yokohama-branded tire sales by developing and introducing two or three new products annually in the U.S. The U.S. market will be the first priority in receiving new Yokohama medium truck tires, which are scheduled to be launched in early 2005, according to Mr. Suzuki.
``From now on,'' Mr. Suzuki pledged, ``we will be dedicated to selling the Yokohama brand and more HP tires.''
Yokohama will post $3.2 billion in sales and $184 million in operating income for 2002, he said. To achieve its growth goals, the Tokyo tire maker will double its production capacity for tires 17 inches in diameter and larger-especially increasing production of 21- to 24-inch tires during the spring of 2003, according to Mr. Suzuki. Some of those HP and ultra-high-performance tires in 17-inch and larger sizes will come from the tire maker's Salem, Va., plant, which has enough capacity already, though Mr. Suzuki hinted the plant may be among other Yokohama facilities receiving ``improvements.''
The company particularly will focus on supplying more truck tires to North America by increasing commercial tire production in Japan through the use of updated technology-as opposed to building new plants-as well as by increasing capacity at its Asian plants outside of Japan, he said.
The company's truck tire joint venture with Germany's Continental A.G. and Japan's Toyo Tire & Rubber Co. Ltd.-GTY Tire Co. in Mount Vernon, Ill.-will remain at current production levels.
``It is not easy to increase production at GTY,'' Mr. Suzuki said. ``As it is a joint venture, it is necessary to get agreement with our other partners to make such a capital investment. Instead, we will study new production methodologies within our Japanese plants as a first choice and perhaps (consider) a new plant in Asia.''
From 2003 to 2005, Mr. Suzuki said Yokohama plans to increase tire sales corporate-wide by 10 percent and non-tire sales by 30 percent as part of GD10.
Already a partner with Continental in the GTY venture, Yokohama also has partnered with Conti and Bridgestone Corp. in support-ring run-flat tire technology. Mr. Suzuki said Yokohama's run-flat tires from the venture will be individually branded and should be available to consumers within three to five years.
The company also is discussing with Continental how to follow Japanese transplant auto makers as they manufacture cars outside of Japan, and it is looking to possibly enhance its original equipment position in North America. However, Yokohama has no plans to sell OE tires to U.S. car makers, Mr. Suzuki said.
Regarding Yokohama Tire Corp., Mr. Suzuki said the subsidiary's 2002 financial results forecast has improved. YTC will report a $5 million loss in 2002 vs. a $19 million loss in 2001. Mr. Suzuki attributed YTC's financial improvement to the following factors:
* An increase in commercial tire sales;
* Production cost reductions at the Salem plant;
* Reductions in distribution costs and fixed expenses;
* Reduction of inventory costs; and
* Reduction of interest costs.
The West Coast dock stoppage in the U.S. last fall caused YTC to lose an estimated $6 million in sales, he said. As a result, Yokohama is increasing production for North America in January and February to make up for those shortfalls during 2003, he said, noting that improving YTC's financial state is a significant project.