Toyo Tire North America Inc. has completed construction of its $150 million passenger and light truck tire plant in White, Ga., and plans to begin trial production by year-end. Commercial scale production should begin on schedule by mid-2006.
The 1.03-million-sq.-ft. facility will employ about 350 at start-up and manufacture 2 million passenger and light truck tires annually. It is an integral part of parent Toyo Tire & Rubber Co. Ltd.'s ``Global Challenge'' business plan to expand annual tire capacity nearly 18 percent to 30 million units worldwide and boost annual tire division sales and operating income by about 30 and 40 percent, respectively, by 2008.
The global strategy will increase Toyo's concentration in tires to 75 percent from 65 percent in fiscal 2005.
The U.S. plant will produce Proxes S/T high-performance tires and Open Country M/T and A/T light truck tires, which primarily will supply dealers in the eastern half of the U.S., according to Travis Roffler, senior director of marketing for Cypress, Calif.-based Toyo Tire (U.S.A.) Corp. He noted that Toyo is selling every tire it can make.
Because of Toyo's new Automated Tire Operation Module (ATOM) manufacturing system, the Georgia plant will need only one-third the labor force a comparable production facility typically employs, Mr. Roffler said.
In an Akron interview with Tire Business, Mr. Roffler said ATOM will provide significant savings in labor costs for the tire maker and help the company reduce the transportation and shipping costs associated with exporting tires to North America from Japan. He said Toyo's shipping costs exceed labor costs because containers are carrying mostly tires with larger rim diameters and therefore taking up more space than in the past.
Several months ago Mr. Roffler told Tire Business that Toyo's philosophy, as a smaller company, ``is you have push brands and you have pull brands. Right now we're a push brand-we push our brand out to our dealers and because of excellent gross margin, and the tire's very profitable for them, we maintain a good share of business with our independent dealers.''
With the evolution of the factory in Georgia coming on board ``and more production and growth in sales,'' he said, ``...my objective over the next three to five years is to convert to where we're pulling in consumers looking for tires to our independent dealers.''
Mr. Roffler said the company wants consumers to walk in the door requesting Toyo tires rather than dealers having to sell them on the prospect.
The tire maker becomes ``that much more important to the dealers'' at that point where ``the phone is ringing off the hook with people looking for Toyo tires and wanting to buy Toyo tires,'' he added.
The rise in shipping expenditures also takes into account rising ocean freight costs. Toyo also believes labor rates in China will rise eventually, thus mitigating any production savings from building a plant in that country, Mr. Roffler said.
Second- and third-stage expansions at the White plant could push capacity to 6 million units and employment to 900 eventually and involve an additional $250 million investment, Toyo said. About 40 percent of the plant's floorspace will be warehousing.
Toyo Tire North America is a wholly owned Toyo Tire subsidiary. Toyo officials have scheduled a Dec. 8 grand opening and ribbon-cutting celebration for the facility.
Osaka, Japan-based Toyo Tire reported North American sales of $617.1 million during the year ended March 31, a 22.7-percent increase over the previous year. In the three months ended June 30, sales in North America were $183.5 million, roughly 20 percent ahead of the fiscal 2005 pace on an annualized basis.
The addition of 2 million more units from the new plant would boost Toyo's sales in North America by more than $100 million, based on fiscal 2005 sales figures. Toyo also sources radial truck tires in the U.S. from the GTY Tire Inc. joint venture in Mount Vernon, Ill., with Continental A.G. and Yokohama Rubber Co. Ltd.
Elsewhere, Toyo boosted capacity for premium car radials at its Sendai and Kuwana, Japan, plants by 3 million units annually and inaugurated production in mid-2004 at its Kunshan, China, joint venture plant, where the firm is sourcing a growing number of its standard, non-performance car tires.
Tire Business Managing Editor Sigmund J. Mikolajczyk contributed to this report.