Yokohama considers building plant in Mexico

MEXICO CITY — Yokohama Rubber Co. Ltd. (YRC) is studying the feasibility of building a tire plant in Mexico.

The study is “at the beginning stages,” Gary Nash, president of Yokohama Tire Mexico S. de R.L. de C.V. (YTMX), told Tire Business in a telephone interview.

In the spring of 2013, soon after being named YTMX president, Mr. Nash had commented that “there will be no manufacturing in Mexico at this time. Everything else in the supply chain will function just like [Yokohama Tire Corp.] in the U.S.

Based in Santa Ana, Calif., YTC — the North American manufacturing and marketing arm of Tokyo-based YRC — manufactures passenger and light truck tires in Salem, Va., and is building a $300 million truck tire plant in West Point, Miss.

YTMX began importing consumer, commercial and off-the-road (OTR) tires into Mexico officially on May 1, 2013. Mr. Nash, who also is executive adviser to YTC's OTR group, declined to reveal sales figures, saying, “Our competitors are watching us real close.”

However, commenting on the Mexican subsidiary's first full calendar year of operations, he said the tire maker “did quite well in 2014…. The company exceeded our expectations in some areas, such as off-road and consumer. Commercial is on target.”

Sixty percent of the tires sold by YTMX in 2014, he said, were consumer tires, with commercial and OTR products each accounting for 20 percent. Each one of the three segments accounted for a third of YTMX's total income, said Mr. Nash , previously a YTC vice president.

According to the 46-year tire industry veteran, who has been selling tires in Mexico since 1980, Mexico is YTC's first directly operated subsidiary in Central America, “although countries such as Honduras and Nicaragua may be pursued later.

“We want to get Mexico up and running first. It's receiving the company's total attention.”

Yokohama operates Yokohama Rubber Latin America Indústria e Comércio Ltda. in Curitaba, Brazil, covering South America, and has designated distributors in most other major South American countries. A full list of Yokohama's partners in Latin America can be found on the firm's website, at http://global.yokohamatire.net/worldwide/.

YTMX — based in the city of Querétaro, 150 miles northwest of Mexico City, with a distribution center in León, Guanajuato — employs 24, including administrative, engineering and warehouse staff. “By the end of this year we hope to have 36 employees,” Mr. Nash said.

“The people we've hired from different companies are known to be the best in their field. We really studied the market over five years. We cherry picked our people.”

They include CEO Humberto Gómez Rojo, a former Bridgestone Firestone president for Latin America, and Advertising Director Alberto Córdova, formerly a Bridgestone Firestone stalwart for 23 years. Mr. Nash said YTMX's pay scale is higher than that of its rivals.

Mr. Nash described YTC as a dealer-driven company, adding, “We're trying to make our tires easy to buy.”

Mexico has 31 states and one Federal District. “We're trying to have at least one dealer in every state,” he said, “and we're trying to be more selective about whom the company chooses to work with.”

Aspiring YTMX dealers are required to have full-service facilities, as a minimum, Mr. Nash said. The company has dealers in about 18 states, as of year-end 2014.

According to Mr. Nash, “we always knew our products were highly accepted here (in Mexico) but there was no distribution point.” Previously YTC worked with an independent distributor.

In a YTC news release in May 2013, Mr. Nash said:

“Personally, I've been selling tires in Mexico since 1980 when I was with another company. The people of Mexico have a desire to buy a good product and have it serviced. I was amazed there was no one down there offering these aftermarket services.

“When I came to Yokohama, it was the first time I had the authority to go into Mexico and actually develop relationships. I have a lot of friends in Mexico today calling and saying, ‘Hey, we want to be a dealer.'

“We have a wide range of choices for dealers and what we want to do is find the ones who are going to support the customer.”

The company invested between $1.5 million and $2 million in marketing efforts in 2014, Mr. Nash said. “We're doing a lot of different things, including (spending on) Yokohama signage. On the advertising side we use radio, billboards and TV spots.”

While the company's budget is small, he said, “it will increase. Our marketing budget goes up to 2020. Our aim is to identify dealers so the customer knows where to go.”

According to the Mexico section of YTC's website, YTMX also has placed ads in several Mexican auto magazines. One ad depicts a Japanese warrior, wearing a vivid red suit of armor and mounted on a tire with a black and orange background. The headline reads: “La Leyenda del Camino” (Legend of the Road). A sub heading reads: “Tecnología y Corazón” (Technology and Heart).

Mr. Nash said Yokohama supplies tires for Fiat-Chrysler vehicles assembled in Mexico and has plans to supply other OEMs in the country. “Mexico is destined to become a little Detroit,” he said.

Asked about the drug cartel-related violence that has swept across much of Mexico in recent years, Mr. Nash said: “It doesn't impact us. You have that everywhere you go. A lot of Japanese companies are located in Mexico.”

Stephen Downer is a freelance writer for Tire Business based in Cuernavaca, Mexico.