Back in the black after three years in the red, Yokohama Tire Corp. (YTC) is targeting 50-percent sales growth by 2008.
That's based on the strength of its performance tire business and an expanded overall product range, top executives said during the Specialty Equipment Market Association (SEMA) Show in Las Vegas.
YTC, a wholly owned subsidiary of Japan's Yokohama Rubber Co. Ltd. (YRC), launched three product lines at SEMA, including an asymmetric-tread all-season tire the company expects will help it gain distribution in the heartland of the U.S., said Norio Karashima, YTC's president and CEO since August.
YTC's strengths up to now have been largely in the Sun Belt-the Pacific, Atlantic and Gulf coasts-Mr. Karashima said. The all-season tire, the Avid TRZ (for Three Ride Zones), was designed to help Yokohama market itself more effectively with and gain dealers in winter belt states, said Art Michalik, director of marketing communications for YTC.
In addition, Yokohama is now distributing its products through American Car Care Centers Inc. and TBC Corp., both of which have considerable distribution in the targeted regions, said James MacMaster, executive vice president, YTC business division.
``Our dealer channel is the strongest it's ever been,'' Mr. MacMaster said, saying the company took a ``huge step backward'' the past few years in terms of re-orienting itself and its product range in order to position itself for the future. ``We were trying to be all things to all people,'' he said.
A key element of the growth strategy is the firm's Advantage associate dealer program, he said, which recently grew to 600 locations. The year-old program, which operates through Yokohama's wholesalers, offers participating dealers a package of sales performance-related business incentives, including store signage and displays, direct mail and consumer credit card programs, quarterly cash rewards, etc.
The Avid TRZ will be available in 23 sizes starting in January. The other tires launched during SEMA were the Advan Sport, Advan Neova and Advan S/T high-performance tires.
YTC's sales should grow to $900 million or more by as early as 2008 and no later than 2012 on the strength of new sales initiatives and a renewed product line, said Mitsuhisa Ono, general manager for the company's North American Tire Business Dept.
YTC returned to the black last year on the strength of greater sales of higher value-added products in the past few years and stringent attention to its selling, general, administrative and interest expenses and despite higher raw materials costs and lower production, according to YRC's fiscal 2004 annual report.
Mr. Karashima, 51, and a 28-year veteran at Yokohama, credited his successor at YTC, Koji Ikawa, for guiding the company through the tough business decisions that were necessary to get YTC back in the black.
``We've turned the corner, examined our expenses...and are really positioned to grow,'' he said.
Mr. Karashima said he operates on two basic philosophies: Business is customer driven, and a successful business must have a spirit of teamwork.
To this end, he said, YTC management and personnel are working to improve QCDDS-quality, cost, development, delivery and service.
The firm anticipates staying in the black this year on the effectiveness of new product launches, continued shift to higher value-added products and improved productivity at the firm's tire plant in Salem, Va., the report states. YTC is making the Avid TRZ at the Salem plant, which Mr. MacMaster said probably has ``the most complex product scheduling'' in the industry.
Workers at that plant have been working day to day without a contract since July 2003 when their previous six-year contract with Yokohama expired. Contract talks recently restarted, but neither YTC nor the United Steelworkers of America has commented publicly on progress.
YTC earlier said it is focusing on expanding its high-performance and Yokohama-branded tire sales by developing and introducing two or three new products annually. The U.S. market, for example, will be the first priority in receiving new Yokohama medium truck tires, which are scheduled to be launched in early 2005, according to Hisao Suzuki, representative executive director and president of YRC's tire group.
YTC reported lower unit sales of passenger tires but higher truck and bus tire unit sales for the year ended March 31, resulting in a net income of $780,000 on sales of $612.4 million-an earnings ratio of 1.3 percent. This contrasts with a loss of $550,000 the previous year on sales of $598.7 million.
Growing at the pace it hopes to achieve, YTC at some point would have to add distribution points beyond the four warehouses it now operates, Mr. MacMaster said.
Overall, Yokohama's tire group reported slightly higher sales of $2.56 billion for the fiscal year, while operating income fell 11.5 percent, to $135.3 million, as surging rubber prices and higher export shipping costs offset the positive effects of higher unit sales.
Yokohama's tire sales increased in all its other export markets-Asia, Australia, the Middle East and Europe-where the gain was 20 percent. These gains were offset partially by lower passenger tire sales in Japan.
Regarding the product launches, YTC said the Avid TRZ ``will set new standards in all-season touring performance.'' It features three distinct tread zones: one for winter traction featuring a silica tread compound and ``adaptive'' sipes that change shape as the tread wears; one featuring four circumferential grooves for effective water evacuation; and a dry grip/cornering zone with two continuous circumferential ribs.
The Avid TRZ rounds out the Avid family, which includes the Avid H4s/V4s, Avid T4, Avid Touring and Avid S/T.
The Advan Neova and Sport lines round out Yokohama's Advan performance range, which is now being marketed under that name worldwide after being the company's primary racing tire family for more than 20 years.
The Advan Neova is billed as ``maximum performance'' radial designed for the highest level of grip; the Advan Sport is considered the ``flagship'' of the line, delivering comfort and low noise in addition to high performance; and the Advan S/T for high-performance sport-utility vehicles.