During a bus trip to the Demilitarized Zone (DMZ) at the border between North and South Korea, Mr. Roberts outlined for Tire Business a number of Nexen's plans for the remainder of the year, noting that dealer reaction to the Next Level program has been “extremely positive — they're raving about how easy it is to understand what their payouts will be, they're very impressed with the generosity of the payouts.
“There's continued incentive for them to continue growing through (the program's) different tiers, which they really like. And then the million-dollar sweepstakes part of it has just added excitement to it, which is a great twist.”
Unlike last year, the company has decided it will not exhibit at the 2015 SEMA Show, focusing instead on the Dealer Partner Days — and private meetings with customers — to promulgate its message. Mr. Roberts acknowledged that last year's SEMA Show “went really well; we had a big story to tell and it was a great platform from which to tell that story. We're very appreciative of SEMA and look to return in the future, but at this point in our growth strategy, it requires us to be more organic and out in the field more.”
Mr. Roberts — whose got an actor Vin Diesel kind of thing going for him in the looks department — has been with Nexen about 16 months. Prior to that, he held positions with several manufacturing companies outside the tire industry — in building products, recreational products and packaged goods. A native Californian, he grew up in Orange County, went to the College of San Diego, then moved back to Orange where he got an MBA.
The following is an edited Q&A discussion with Mr. Roberts:
Q: What are your brand-building efforts in this country and how many dealers are in your network?
A: “We have 2,200 signed up through the Next Level program, of which about 1,500 we would consider ‘committed' to the Nexen brand. They're buying more than a couple of hundred units or more a year.”
Q: Isn't that a low amount — kind of baby steps for the company?
A: “Yes, obviously we're not one of the main volume guys out there — we only have 2-percent market share — so for an account to do 200 units with us, that's pretty significant. Now, we don't start rewarding people until they do 400 units in a year, but that gives customers that are doing a hundred, 200, 250 the added incentive to step up to the next level, and that's really where we feel we're going to get the most growth — from people who are purchasing Nexen but not as much as they could.
“This is sort of that nudge to help them get there.”
Q: Who are your biggest competitors in your tier — which brands?
A: “There's Falken and Toyo and Yokohama. Kumho's a competitor. They're the main targets. If we're going to take share, it's from them. And Giti, also.”
Q: What's the importance/relevance of Nexen's OE fitments and what effect does that have on your dealer customers?
A: “It's huge. Not only does it lend to the credibility of our product line by passing the specifications and rigorous testing that the OE manufacturers put on us, but it creates a greater brand awareness for the consumer. The more and more they see our tires on their vehicles, the greater that's going to help our brand.
“And lastly, it just directly relates to business. Our studies show that 27 percent of tires are replaced with exactly what was on (the vehicle). So the more tires we can get on the road at the OE fitment level, that increases demand in the replacement market for our product, which means dealers need to begin stocking our product more so they can meet that demand.
“That makes us a more valuable brand to them, to the dealers.”
Q: Why did Nexen choose to build its first overseas plant in Europe rather than the U.S. or the Americas?
A: “It coincided with the awarding of our products (OE fitment) on Volkswagen. The plant is literally next door to a Volkswagen plant. Additionally, it's a central location for manufacturing to our European market, as well. But specifically, it was a logistical decision.”
With a number of tire companies already building or looking to the U.S. and the Americas for factory sites, is Nexen also considering that?
“It's on the map, on the radar, I should say.… We have significant capacity still available to us, so with the additional 5 million units of capacity we've built over the last year, we've got some room to grow. Also, with the new Czech Republic plant coming on board, we need to get that up and running and sustainable before we make any additional investments in new factories.
“Our growth plan in the U.S. takes us to a level where we think we're going to outgrow that capacity by 2020. And that's when we're going to begin to identify whether the U.S. is going to be the next location for a new plant.”
Q: What's been the effect of the pending Chinese duties on the Nexen brand?
A: “So far, not as immediate as we'd thought due to the overstock in Chinese products after the (government's) announcement. However, we're starting to see, with the depletion of the Chinese inventory, a boost in the demand for our product because we meet that price point that's being left open with a gap.
“But long term, we don't see the tariff as a savior to our brand. We have to build our own brand and not depend on a duty to be successful in the marketplace.
“Although it's a temporary boon to our business, it's not what we're relying on for long-term growth.”
Q: Any plans to add larger truck tires to Nexen's mix?
A: “We have no plans to add medium truck tires at this time. However, we're in the middle of a market analysis and a business plan for larger mud tires. Any decision on a plan would not involve adding any new (mud) patterns for at least 12 to 18 months.”