GREEN, OhioNow that Taiwan's Kenda Rubber Industrial Co. Ltd. has opened a permanent U.S. technical center near Akron, the tire maker can focus on its primary goalbecoming a Tier 1 OE tire supplier for the North American market.
James (Jimmy) Yang, president of American Kenda Rubber Co. Ltd., made those intentions explicitly clear to an assembled group of employees, business leaders, government officials and media during his firm's ribbon-cutting ceremony held Nov. 9 to open the 50,000-sq.-ft. facility.
The OE business will give me two ingredients, said Mr. Yang, going on to explain that one is the marketing that will help elevate the brand image. Two, it will force Kenda to raise the bar on this technology, the same as we've done (manufacturing) bicycle, ATV, lawnmower and motorcycle tires.
One of the reasons Kenda is a substantial player, a leading brand in those specialty tire markets, is because Kenda (has) very good market share in those areas, which helps Kenda's brand image in those areas and which also helps raise the engineering capability.
Kenda already supplies temporary spare tires to several auto makers in North America, Mr. Yang said. Those relationships certainly will help Kenda break into the tire business, he said, citing Hankook as a company that forged the same path.
Mr. Yang was one of nine company or government officials to address the gathering during the opening ceremony, which included Mary Taylor, lieutenant governor of the state of Ohio, and Kenda Rubber Chairman Ying Ming Yang, Jimmy's brother.
Mr. Yang stressed that Kenda's long-term goal doesn't mean the company will abandon nor de-emphasize its substantial market share in the specialty tire sector.
(Automotive OE) will account for a lot of Kenda's future growth, he said. Right now, the bicycle tires, the motorcycle tires and automotive tires all have even market share. But eventually our automotive tires business will account for more than 50 percent of total company sales.
The goal, Jimmy Yang said, is for his firm to secure an OE contract within four to five years.
And the opening of the technical center, where OE-quality tires can be developed and tested, is a big step in that direction.
The technical center, which is housed in a renovated industrial building just east of the Akron-Canton Airport, soon will be filled with assorted testing equipment, laboratories and a full complement of staff. It has been in place for 19 months, and today it employs 18 people with a combined 120 years of tire industry experience, according to Tom Will-iams, vice president of engineering at Kenda.
He said the facility eventually will employ between 60 and 70, depending on how good the sales branches do and how well they grow so we can grow the people to support them.
That growth will include assembling an OE sales team, with OE experience, which will start knocking on the door of some of the OEs, said Mr. Yang, who has served as the top executive at the firm's North American headquarters in Reynoldsburg, Ohio, since it was established in 1982.
It's not going to be a project where you see the fruits right away. It's going to be two or three years before we gain some interest from OEs.
The facility will acquire more space once leases expire for three current tenants. Even so, Mr. Yang said he expects the technical center to outgrow the building in five to seven years, creating a need for a new, custom-built facility.
Kenda means never stop growing in Chinese, he said, and the firm, which started as a family-run bicycle tire manufacturer in 1962, has lived by that motto. Kenda, the No. 28 tire maker worldwide, posted 2014 sales of $1.17 billion and operates tire plants in Taiwan, China, Vietnam and Indonesia, as well as wheel rim operations in four U.S. cities, including one in Tallmadge, Ohio.
The firm is building a second plant in Vietnam and expanding consumer tire capacity at its plant in Taiwan.
Is the next step in Kenda's growth to build a tire plant in the U.S., as some of its competitors have done?
I never rule out that possibility, Mr. Yang said. When the market is right for Kenda to consider a tire manufacturing facility, Kenda will do it. Do I have a timetable? Not at the moment. But we'll see how the market progresses and make a decision when it's needed.
Mr. Yang said people called him crazy for acquiring a wheel manufacturing facility in the late 1990s, a time he recalled when manufacturing was moving out of the U.S.
Maybe I'm dumb, maybe I'm stupid, but you take a risk, he said of that move. I did see the future here.
I never ruled it out that the manufacturing would come back to the states. I think I was correct by acquiring the rim manufacturing that gave Kenda the ability to compete against Carlisle in the specialty lawn and garden, ATV market, because of the rim manufacturing capabilities.
Mr. Yang said that experience could lay the groundwork for a future tire manufacturing plant, perhaps in Ohio, where Kenda is firmly established.
Manufacturing wheels is different from manufacturing tires, he said. But I'm pretty experienced in making tires in Taiwan and China, so I can migrate the tire manufacturing experience, and adding my wheel manufacturing experience in the states, it's not going to be a very scary challenge if I decide to manufacture tires in the states.
This report appeared in a recent edition of Rubber & Plastics News, an Akron-based sister publication of Tire Business.