ESSEN, Germany—Taiwan's Kenda Rubber Industrial Co. Ltd.—the 30th ranked tire maker worldwide and No. 2 in Taiwan behind Maxxis International—is ramping up an ambitious global expansion and modernization initiative.
That push will add radial truck/bus tires to its portfolio and recast the company's research and development efforts.
Kenda Chairman Ying-Ming Yang discussed his company's plans with Tire Business during the recent Reifen Show in Essen.
Among the capital investments on tap are plans for a radial truck and bus tire plant in China, new R&D facilities in China and the U.S., car tire capacity expansions in China and new sales/marketing ventures throughout Europe, Mr. Yang said, without disclosing the budget for the projects.
At the same time, Mr. Yang confirmed reports that Kenda had been in the bidding last year for Cooper Tire & Rubber Co., saying he felt his company's bid was of higher value than the one Cooper originally accepted from India's Apollo Tyre Co. Ltd.
He declined to elaborate on why he thought Cooper opted for Apollo's bid over Kenda's. Kenda and Cooper were joint venture partners in a plant in Kunshan, China, from 2007 to 2011, at which time Cooper bought out Kenda's share.
Kenda's decision to expand into truck tires runs parallel to the Taipei-based tire maker's global expansion plans.
Kenda recently opened a European headquarters in Oldenburg, Germany, and hired Tom Williams, chief engineer at Hankook Tire America Corp. for the past 21 years, to head up a project to restructure and expand the firm's research and development efforts worldwide.
The new truck/bus tire plant will be built on land near its existing car tire plant in Kunshan, Jiangsu Province. Site preparation is under way, Mr. Yang said, with production expected to begin by 2016.
Mr. Yang declined to provide investment or capacity details for the project, but media reports from Taiwan and China put the value of the project at more than $100 million for a plant capable of about 6,000 units a day.
Mr. Yang, who was present at Reifen to support the firm's expanded sales and marketing presence in Europe, said the plant's output would be directed predominantly at the Chinese market, at least initially.
Kenda's plan for a truck/bus tire plant are in addition to plans announced in 2012 for a $333 million factory for car, light truck, trailer and motorcycle tires in Huizhou, Guangdong Province, due on stream by 2016. That plant is designed to produce 83,000 radial tires per day, Mr. Yang told shareholders at that year's annual meeting.
Mr. Yang declined to say how much additional revenue he thought the truck/bus radial business would yield. Kenda was the No. 30 tire maker in 2012 with sales of $1.06 billion, according to Tire Business' annual survey of the global industry.
Last year Hongder Chang, Kenda's general manager, speaking at an international dealer appreciation dinner in Taipei, said Kenda's long-term plans are for $2 billion in annual sales, or double the current level.
Opening a sales office in Germany is central to Kenda's plan to establish itself on a broader scale in Europe, the company said. Up to now the tire maker has been present in a number of countries—notably France, Spain, the United Kingdom and Italy—but now sees the need for a continent-wide presence.
Kenda earlier this year hired Michael Andre, previously head of Giti Tire Deutschland G.m.b.H., to head up the German sales effort as marketing and sales manager, Kenda Rubber Industrial Co. Europe G.m.b.H.
“Together with the development of an attractive brand image and the formation of a network of dedicated sales partners, quality is one of our three pillars for success in Europe,” Mr. Andre said. Among other goals will be to build an OE presence, he said.
Kenda also took a step recently to solidify its European credentials: joining the Imported Tyre Manufacturers' Association (ITMA), a U.K.-based trade group that represents the interests of tire manufacturers who do not produce in Europe.
It informs members about legal requirements and technical regulations and provides a forum through which tire manufacturers can share their views and opinions.
Kenda recently launched a website dedicated to its business in the Middle East—www.kendatiresme.com—where it works closely with Varga Trading Co. L.L.C., a Dubai-based auto parts importer and distributor.
Commenting on Kenda's transformation into a more broad-based tire maker, Mr. Yang said, “We started out from bicycles and then motorcycle tires. In the beginning to get involved in automotive sector we used our profits from original (equipment) business....
“Today PCR is around 35 percent of our business,” Mr. Yang said, “(and) eventually I think that number will increase up to 60 percent, even as we will still grow the bicycle and motorbike tires business....
“But when we expanded our car tire business, we didn't forget our motorbike or bicycle tire business, which are actually more profitable for us because we have a good brand. We will never forget small tires. Also in Taiwan the bicycle tire business is very big right now and very strong....”
Addressing Kenda's growing presence in China, Mr. Yang said, “The small tire business also gave us our sales environment overseas. Also people who buy bicycle tires in China step up to driving cars,...and when they go to choose a product, they (will) know Kenda is a good brand.”
The plants in Kunshan and Huizhou would become Kenda's sixth and seventh production sites. It already has two plants in Taiwan, two in China and one in Vietnam, the latter of which opened in 1997.
Kenda also has contingency plans for Taiwan's Changhua district, where it has an option to purchase land for a passenger and light truck tire plant that eventually could produce up to 25,000 units daily. That possibility came to light in 2011, but no concrete action has yet taken place.
Mr. Wilson, who accompanied Mr. Yang at Kenda's booth at Reifen, said one of his key tasks will be to broaden the design portfolio to include more products designed for regional conditions and markets.
“That (product design for specific markets) is part of the growth a company of this type,” he said. “You start out making products but now you have got to make the products more specific and that requires more engineering, it requires more functionality from the company.
“Right now the issue is not about production. We have production. It is about the engineering that goes into that. I am sure as time goes on we will have no problem with expanding production.
“It all requires investment, time and testing.”
While still new to the job, Mr. Wilson called it “a very exciting time for me. I have been at Kenda Tires for three months now, and in that time they have been very welcoming and very open to all the ideas and thoughts coming in from around the world. And I will try to do everything I can to get Kenda products to meet all the global requirements.”
Mr. Wilson is tasked with a global restructuring and revision of R&D. “So hopefully, in the very near future, we will start seeing some of the effects of these things. There is a quite a big investment in expansion, machinery, equipment and engineers: all of the things we will need to do a better job for you.
Mr. Yang said Kenda is boosting its budget for R&D, to perhaps 2.5 percent of revenue from roughly 2 percent.
To reach this reporter: [email protected]; 330-865-6145. Patrick Raleigh, Crain News Service, contributed to this report.