PANAMA CITY, Panama—American Kenda Rubber Industrial Co. Ltd.'s plan to move its U.S. technical center into a permanent facility in Green, Ohio, later this year underscores the company's taking a much higher profile in the North American passenger and light truck tire market.
Supporting this objective, parent Kenda Rubber Industrial Co. Ltd. is expanding production capacity at plants in Vietnam and Taiwan for these tires, according to Jimmy Yang, chairman of American Kenda and vice chairman and president of Kenda Rubber, in a recent interview with Tire Business at the Latin American & Caribbean Tyre Expo in Panama City.
Kenda, based in Yuanlin Township, Taiwan, will increase capacity in stages at its Kenda Rubber (Vietnam) Co. Ltd. factory in Dong Nai, Vietnam, to 20,000 passenger and light truck and tires a day eventually. The expansion will take place in 5,000-unit increments, with the first stage ready by mid-2017.
In addition, the company will double consumer tire capacity at its headquarters plant in Yun-Lin, Taiwan, to 10,000 units a day by year-end 2016.
Kenda has earmarked $100 million and $50 million, respectively, to support these projects in their initial phases.
This ramp-up in capacity is why the company has a tech center in the Akron area, Mr. Yang said.
“The tech center in North America is paving the way for the growth in both OE and replacement of Kenda tires in North America.”
Gaining OE contracts with vehicle makers is a key part of the company's growth strategy.
“We want to start a dialogue with OE, and we need the technical ability,” Mr. Yang said. “Now we are only in spare tires,” he said, notably providing temporary spares for some Honda and Mitsubishi models in the U.S.
Kenda also has had some success with OE vehicle makers in China, including supplying ground, that is, non-spare tires to Shanghai General Motors Co. Ltd. In addition, the company is working on several opportunities with some Chinese auto makers, Mr. Yang said.
The company also has been successful in gaining OEM supply contracts to bicycle, motorcycle, ATV, golf cart and lawn mower manufacturers.
To strengthen and grow its OE business and to design tires for North American vehicles, Kenda set up a technical center in early 2014 near Akron and hired Tom Williams, who had been chief engineer at Hankook Tire America Corp. for 21 years, to head up the project as vice president of engineering. Kenda initially started operating out of temporary quarters at Martin Wheel Co., an affiliated company, in Tallmadge, Ohio.
The effort started with just one engineer, Mr. Yang said, but that number quickly grew to 10 by year-end. Kenda American Technical Center (KATC), as the operation is called, now has 18 engineers working on designing tires to be sold in North America.
But Kenda is nowhere near where it wants to be with its R&D efforts. In the next few years, Mr. Yang expects to have as many as 60 engineers working out of the new 45,000-sq.-ft. facility, once it is open.
“We hope in the next five years to have some success in the OE market,” Mr. Yang said.
Kenda purchased the building for the KATC, which is located across from Akron Canton Airport in Green, and has been renovating it, adding equipment for testing and a small lab. The company will open it with a ribbon-cutting ceremony Nov. 10.
The facility will focus on all technical aspects related to Kenda's product range, including bicycle, ATV, lawn and garden tires, in addition to passenger and light truck tires.
Prior to opening the tech center in Tallmadge, all Kenda tires for North America were designed at the company's R&D center in Taiwan. The tire maker also operates a technical center in China.
Tire Business interviewed Mr. Yang in July at the company's booth during the Latin American & Caribbean Tyre Expo. Kenda was there, he said, to look for new distributors in areas of Central and Latin America, where Kenda lacks good representation.
“The Latin America market is tied in with the North American market,” he said, “so the product developed by the KATC technical center will greatly benefit the Latin America market.”
In Latin America, Kenda has a strong presence in Costa Rica, Mexico, Colombia and Brazil, according to Mr. Yang.
Kenda reported tire sales of $1.17 billion in 2014, placing it 28th on the Tire Business 2015 Global Tire Report ranking of the world's 75 largest tire makers.
The company, which has its North American headquarters in Reynoldsburg, Ohio, manufactures bicycle/wheelchair, motorcycle, industrial, trailer, ATV and passenger car and light truck tires at five factories worldwide, including one in Taiwan, another in Vietnam and three in China.
Following the decision by the U.S. International Trade Commission to place stiff antidumping and countervailing duties on Chinese passenger and light truck tires imported into the U.S., Mr. Yang said Kenda has been decreasing its shipments gradually from China to the U.S. and shifting more to its Taiwan plant.
Could Kenda build a tire factory in the U.S.? Mr. Yang doesn't rule it out.
“This is something to be considered for in the future,” he said. “It is still too early to make any commitment, but I'll never say no to anything.”
To reach this reporter: dzielasko@ crain.com; 330-865-6131.