The title of world's largest tire maker is prestigious, no question, and Bridgestone Corp. and Group Michelin have taken turns at the top for the past 23 years.
Likewise, Goodyear and Continental A.G. have been firmly ensconced in the Nos. 3 and 4 spots for the past 22 years.
Competition for the Nos. 5 through 10 slots, however, is growing increasingly intriguing, with five global competitors jockeying for the higher positions. Sumitomo Rubber Industries Ltd. (SRI), Pirelli Tyre S.p.A., Hankook Tire Co. Inc. and Yokohama Rubber Co. Ltd. all are realistically capable of being No. 5, along with the proposed Apollo Tyres Ltd.-Cooper Tire & Rubber Co. combination.
Sumitomo Chairman Ikuji Ikeda offered a “shot across the bow,” so to speak, to others in this grouping in laying out SRI's “Vision 2020” plans for growth, which calls for sales approaching $15 billion by 2020 (see story on page 24).
Meanwhile, Hankook executives have been stating for years their goal is to grow enough to claim the No. 5 spot. Pirelli executives will lay out their strategy for the coming several years this November.
These firms' plans are aggressive and illustrate the competitiveness of the global market.
Sumitomo has committed $1.3 billion in new capacity investments over the past four years; Hankook has built plants in China and Hungary and is evaluating sites in the U.S. for what would be its seventh plant worldwide; Pirelli has spent or budgeted more than $2.5 billion to add the equivalent of five or six new plants in new factories, acquisitions and expansions; and Yokohama has committed more than $1.2 billion for plants in Russia and the U.S. and other capacity expansions.
It's still early to handicap the proposed Apollo-Cooper combination's growth prospects, but based on their respective 2012 financial results, the merged company would claim seventh on the global ranking, slipping ahead of Hankook, which just this year edged past Yokohama into the lucky No. 7 slot.
Considering that most experts expect growth to be concentrated in the Asia/Pacific region in the coming decade, these competitors can't take their eyes off the No. 9 tire maker, Taiwan's Maxxis International/Cheng Shin Rubber, or any of a handful of globally oriented Chinese makers such as Hangzhou Zhongce Rubber Co. or GITI Tire Pte. Ltd.
Of course, growth for growth's sake is not the ultimate goal. As Mr. Ikeda put it in Sumitomo's Vision 2020 report, a priority is to “ensure long-term sustainable returns” to shareholders.
But moving up a slot or two in the world rankings also is a powerful motivation.
The next few years should be exciting as these tire makers execute their growth plans.