The aggressiveness that Yokohama Tire Corp. (YTC) showed during the pandemic is paying dividends today, according to Jeff Barna, president and CEO of the U.S.-based subsidiary of Japanese tire maker Yokohama Rubber Co. Ltd. (YRC).
Mr. Barna told Tire Business the company continues to strengthen its position in North America, bolstering its high value-added passenger car and medium truck tires lineup, while maintaining its commitment to the North American tire dealer.
How's business thus far in 2021?
Business across all segments has been strong thus far in 2021. The market is obviously in a better position versus this time last year when we were all faced with the uncertainties of the pandemic, so the adage that a rising tide lifts all ships fits here.
That being said, based on our approach to our business last year, we are reaping significant dividends and are outpacing the market in all categories.
What would you like customers to know about how your company tackled the challenges brought on by the pandemic?
We wrapped up 2019 with the anticipation that 2020 was going to be an incredibly promising year for us. Our perspective (at the time) was that the quality of our people and teams, organizational structure, programming, products and customer alignment were about as good as it's been since I arrived here at Yokohama in 2017.
While it might have been easy to feel (and act) "inconvenienced" by the pandemic, we rather elected to go on the offensive. The thinking was that others might take a more passive approach to the market while dealing with COVID, so we unilaterally viewed this as an opportunity to seize the moment.
Our employees and especially our customers embraced an "It's GO time" approach, which not only has served us well throughout 2020 but created a great springboard for '21. In retrospect, our customers would be able to tell you that we approached 2020 with a good deal of aggressiveness that set us up extremely well for 2021.
How is your transition going being named president and CEO of Yokohama Tire Corp.?
It's going well. The company recognizes North America as a potential global driver of growth and the support we've received — and I've received personally from our customers — further ingrains this sentiment within the walls of our parent YRC. Given last year's volatility, the U.S. team was given an opportunity to embark on what I'd label to be a homegrown strategic planning process.
The outcome of our strategic plan was to gain even further alignment with YRC and, in particular, confirm strategic investments for this market throughout the plan year 2025.
I'm happy to say that we are highly satisfied that YTC will be given the opportunity to make even further contributions within the global YRC company portfolio.
Our objective is to become YRC's No. 1 entity worldwide by 2025, and we are confident that this can be achieved as a result of their committed support.
YRC recently announced its Yokohama Transformation 2023 (YX2023) strategy that involves the consumer tire sector focusing on high-value-added tires and the commercial tire segment seizing business opportunities presented by market changes. Can you explain that change and what it might mean to the way you approach business?
The backbone of YTC's strategy here in the U.S. for years has already been cemented in high-value-added passenger car tires along with our strength in medium truck. So, for all intents and purposes, there really shouldn't be any surprises for our channel partners but rather a confirmation that YTC's GTM strategy is sound.
Do you expect any supply difficulties in the second half of the year?
Our industry's supply chain remains an unbelievable challenge and still requires months of work to sort out. I won't go on to list the litany of issues confronting us all primarily because your publication has done an excellent job of keeping us all current on the malaise.
As for YTC, we are told that our fill rates are actually better than most, which is a sad commentary knowing that we are nowhere near where we want to be or should be.
How have backups at ports impacted business? Do you expect the situation to resolve anytime soon?
We are starting to see some relief in terms of the California ports working down the congestion and turning ships faster, however I feel as if we will have to live with the premium paid on ocean freight containers for the foreseeable future.
The only way to technically deal with the delays would be to encourage higher stocking levels in our D/Cs, which is great in theory but hasn't been as practical in execution based on current customer demand.
What are some of the pleasant surprises you are seeing?
Demand across all product sectors exceeding 2019 levels, and starting to actually get out from behind Teams meetings and seeing a few customers in person — people doing business with people face-to-face — not sure if that counts as a surprise, but it sure is refreshing.
How will antidumping duties on passenger and light truck tires made in Thailand, South Korea, Taiwan and Vietnam impact the industry?
I think the rates are now pretty public and some market action has been and will be required to offset these costs. It remains to be seen how much the consumer will accept.
What kind of trends are you seeing in the marketplace? How are you reacting to them?
Unfortunately, as we have discussed, some key themes this year include increased costs, constricted supply chains and some lingering uncertainty. So, addressing cost pressure via price recovery and expense management, while preserving strategic priorities becomes critically important.
Maintaining this balance is only possible with strong partner relationships, specifically customers who understand and appreciate your desired end game. In turn, we remain focused on transparency with our partners to arrive at mutually beneficial destinations.
What sectors are growing?
In consumer, LTR (CUV, SUV, light truck) … hands down. We're addressing this through capital investments that will increase supply by 2022.
Do you expect to roll out any additional products in 2021?
2021 is relatively light in the consumer space with just a couple of customer-exclusive products planned.
However, this is on the heels of 16 new products being launched over the course of the last five years, so in terms of total product line vitality, we are still really pleased with where we sit.
In the commercial sector, the past five years have been similarly active, but we are still planning on several new lines for the second half of 2021. Some of these will be replacements for existing products, while others will be incremental to our business.
Yokohama is among the tire makers that continue to invest heavily in technology, sustainability and future mobility. What technology will be a game-changer?
As the world continues to transform digitally, our focus has been on CASE [Connectivity, Autonomous, Sharing/Subscription and Electrification] and MaaS [Mobility as a Service] trends accelerating. The future of tire usage, performance requirements, cost and ownership are all subject to change, but Yokohama is uniquely positioned to take advantage of those changes through service relationships, sensor technology and external industry alliances.
What has been the overriding factor for increases in tire pricing?
Unforeseen, unprecedented, unbudgeted cost increases, … you could throw in unbelievable, as well, if you like.
Do you expect any major investments in the next six months or year, in either personnel, distribution facilities or capacity expansions?
All of the above, and apologies that this is the extent of my specificity.
How has the UHP market fared during the pandemic? Do you see continued growth in this segment?
Obviously, all segments were negatively impacted by the pandemic and the UHP market was no exception. However, as we've discussed some of our strengths in 2021, we see our UHP offerings as being drivers of some of that success.
In the near term, we see what has classically been categorized as UHP growing, which is an extension of a consistent trend for about the last decade.
However, just like in other segments, the future UHP tires, specifically in all-season categories, will be asked to do more than their predecessors, including but not limited to higher mileage and four-season traction.
What did the company learn about itself during the pandemic?
We learned that our business is less about building tire products while more than ever underscoring the importance of personal connections, both internally with our employees and externally with our customers.
Based on our company's size, we pride ourselves on the ability to be more agile than most, more decisive, more self-aware, more customer-centric, more passionate, more continuous improvement oriented and genuinely more committed to doing things the right way.
It was confirmed throughout the pandemic that culture matters and that it takes truly unique and truly committed people/employees to preserve the foundational tenets of who we are as a company. We learned that we could make some tough calls in order to preserve the sanctity of those guiding principles through our resolve.
We confirmed that we are partnered with some of the most forward-thinking customers in the world and are asked to participate in their success on a daily basis. We cannot take any of the above for granted. That is what we learned.
Anything to add?
We always like to underscore our commitment to the North American market and, of course, the independent tire dealer. Navigating through the pandemic has challenged all of us, and as we've outlined here, we still have some work to do.
However, I think more than ever, we are aligned with our partners and have the commitment of YRC to continue to strengthen our position here in the U.S. We like who we are.