QINGDAO, China (Nov. 2, 2010) — Hankook Tire Co. Ltd. has decided to build its sixth tire plant in Indonesia, but the company is still negotiating with the Indonesian government over the size of the plant and the extent of support from the government, Hankook Vice President J.H. Park said during a supplier event in Qingdao recently.
A benefit of building in Indonesia, Mr. Park said, is that a large investment there will help Hankook to secure supplies of natural rubber in the mid-term.
Speaking at the recent opening of Rhodia S.A.'s silica plant in Qingdao, Mr. Park—corporate vice-president for strategy and purchasing—told European Rubber Journal, a sister publication of Tire Business: “Maybe it will be Indonesia. It is just the size we are discussing today.”
Mr. Park noted that Indonesia has a lot of natural rubber (NR) and that locating the plant in that country will help to secure supplies of the raw material. He added the company is actively considering ways to secure supplies, including investing in rubber processing factories, a relatively small investment. Another more likely option is to develop a partnership with either a rubber estate company or with a series of rubber processing factories.
This eventually may lead to the acquisition of a plantation, Mr. Park said. “We are thinking to invest someday—not right now—in NR,” he said, noting that Hankook is aware that raw material supply will increasingly become an issue and his company is considering how to secure supplies of technologically significant raw materials.
In many cases, he said, the company can sign long-term supply contracts with suppliers, but in other cases, it may have to form joint ventures with suppliers, or even buy out completely a supplier.
“We plan to go into strategic raw materials,” he said. This is a direction for the future and we need support from the raw material makers. We make a relationship with many suppliers.”