LAS VEGAS (Dec. 29, 2014) — Toyo Tire U.S.A. Corp.'s growth the past couple of years necessitated the firm's decision to expand its tire plant in White, Ga., company executives said in an interview during the recent Specialty Equipment Market Association (SEMA) show in Las Vegas.
“We've had significant growth in 2013 and 2014, and our growth really is stunted by capacity. That's why we have made the major investments in White,” said Roy Bromfield, Toyo's chief operating officer, noting “the company is not afraid to add additional capacity in the U.S. because we really are one of the key markets for Toyo worldwide.”
Toyo Tire & Rubber Co.'s tire sales in North America last year were estimated at $1.2 billion, and sales through the first nine months of 2014 were up 14 percent, according to the firm's third quarter financial report.
Interviewed at Toyo's SEMA show booth, Mr. Bromfield said Toyo is increasing annual production initially at White by 2 million tires, with a majority of that new capacity targeted at its enthusiast products, including Proxes UHP tires and Open Country light truck tires. The additional capacity is almost all light truck or larger rim diameter UHP, he said.
When completed, this latest expansion, the fourth at the plant, will increase capacity by about 3.8 million units a year.
“The pace of the second phase will depend on market demand, but our strategic plans call for needing it as soon as possible over the next two or three years,” a Toyo spokeswoman said.
Toyo expects to begin installing production equipment in January, Mr. Bromfield said, with the initial output from the expansion commencing this coming summer. The expansion includes additional mixing capacity “so all the semi-finished products that are needed for the actual building machines is done at the plant,” he said.
The White plant features Toyo's proprietary Advanced Tire Operation Modules (ATOM) process, which produces tires on an automated, hands-free basis.
Prior to this latest expansion, the plant operated 34 ATOM machines, which can produce seven to eight tires at a time and about 5 million a year — with half focusing on light truck tires and about a quarter consisting of sport-utility vehicle tires, James Hawk, chairman of Toyo Tire Holdings America Inc. and president of Toyo Tire North America, the company's U.S. manufacturing company, said earlier this year.
Once this fourth and final expansion is completed, the plant will have about 40 ATOM machines, increasing the annual output to about 9 million tires, he said.
The company will continue to add ATOM modules throughout the second half of 2015 and the first half of 2016, Mr. Bromfield said, “so we're at max production by the summer of 2016.
“There will be a one-year actual ramp-up of production while the first part of 2015 is installation of all the machinery,” he added.
Toyo has invested about $500 million so far in the plant, which employs about 1,100, Mr. Hawk said.
Once the fourth phase is completed, he estimated the investment will near $1 billion and employment will grow to between 1,400 and 1,600. The factory produces both Toyo- and Nitto-brand tires.
In addition to supplying tires to North American tire dealers and distributors from the White plant, Toyo also sources product for the U.S. from the parent company's plant in Perak, Malaysia, that began producing tires in mid-2013, Mr. Bromfield said.
That facility also features ATOM technology and is located on land adjacent to the Silverstone Bhd. tire plant Toyo acquired in 2011.
Toyo in the U.S. previously received a small number of tires from the company's passenger and light truck tire plant near Shanghai, China, but since has shifted that production to its plants in Japan. This was done in anticipation of the U.S.'s placing higher duties on consumer tires imported from China, according to Mr. Bromfield.
“We made a strategic decision to move it (the Chinese production), and some of the production that was in Japan that may go to other parts of the world will then come out of the China plant,” he said.
At this year's SEMA show, Toyo showcased its newest consumer tires launched earlier in the year, the Open Country R/T light truck tire and Versado Noir touring passenger tire.
The company had a major presence at the show, including a booth on the trade show floor, the Toyo Tires Treadpass exhibit, featuring nearly 30 custom vehicles in a walkway connecting the South and Central Halls, and an outdoor display in front of the South Hall offering a video and photo experience.
Toyo tires also were fitted on many of the vehicles on display. “Walking through the show you'll notice that our tires are on more vehicles than any other tire company,” said Amy Coleman, Toyo's senior director of marketing.
This is in keeping with the company's ”All or Nothing” marketing theme, she said. “Basically we want to be the type of company that's all or nothing. We do things the right way from everything from quality, to design, to the types of sponsorships we do…. Go big or go home type of attitude.”
Toyo gave about 20 of its key tire dealers and distributors a first-hand look at the Open Country R/T and Versado Noir earlier this year in what it called an All or Nothing road tour.
That tour also could have been called a show of opposites, the Toyo executives said, as it featured the rugged Open Country R/T and the refined Versado Noir.
The Open Country R/T is a cross between an all-terrain and a mud terrain tire, Mr. Bromfield said. It has a rugged look, performs off road yet is meant to be driven on the highway.
“What we've found in our marketing research is lots of folks like the looks, the aggressive bold look of an M/T, but it's not really their driving style.”
Mr. Bromfield said the launch of the Open Country R/T generated buzz sufficient enough to sell out the first three months of inventory in two weeks.
In contrast, the Versado Noir is a plush riding, quiet, long-mileage tire aimed at the luxury touring, all-season segment. The company selected the name to help it stand out in a field crowded with similar products.
“We really tried to use the elegance of the name, the elegance of our activities,” Mr. Bromfield said. “So imagine that elegant product and the Open Country R/T being launched to our dealers at the same time.”
Toyo introduced the Open Country R/T initially in eight sizes and will add another seven in 2015; the Versado Noir will have a full slate of 47 sizes in place by year-end.
The Versado is an example of how Toyo is stepping up its offerings in all product categories, not just enthusiast and off road, Mr. Bromfield said.
“Although we position ourselves and we brand ourselves as an enthusiast driven company, especially off-road and on-road performance with our Proxes line, our ultra-high-performance line, it is very critical to us and our dealers to have a full line of products,” he said.
“So we want to give them exciting and differentiated products for their mix.”
The new passenger and light truck initiatives complement a revival of Toyo's commercial tire business, as the company discussed at the Mid America Trucking Show earlier this year.
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Mr. Zielasko is editor and publisher of Tire Business. He can be reached at [email protected].
