HYOGO, Japan — Toyo Tire Corp.'s decision to build a tire plant in Europe will play a pivotal role in the firm's growth strategy for the next four years, plans that call for raising the company's global production capacity by 8 million units a year and improving its market-share position in North America.
Toyo laid out these and other goals in a corporate strategy briefing disclosed on Aug. 29.
Among the details of the growth strategy was a goal of becoming the No. 5 tire company in North America — where the company is ranked seventh in terms of dollar sales volume, behind Cooper Tire & Rubber Co. and Hankook Tire America Corp.
Toyo disclosed plans in late July to build a $450 million tire in plant in Indija, Serbia,
saying it would help it build its presence in Europe, where it derives about 15% of its global sales.
In its strategy briefing, Toyo notes this plant — due on stream in early 2020 — will allow it to redirect capacity at plants in Japan and Malaysia now destined for Europe to other key markets.
To this end, Toyo also is increasing consumer tire capacity by 48% at its 6-year-old plant in Perak, Malaysia, plant to 7.4 million units per year and adding 200,000 units of annual truck tire capacity at its Kuwana, Japan, plant.
Scheduled for start-up by January 2022, the plant in Serbia will absorb production of European-destined tires from Toyo factories in Japan, which will be have freed-up capacity to absorb Japanese-market-targeted production currently in place in Malaysia and China.
In addition, the unit will contribute to the supply of larger-diameter/performance tires for North America, complementing the company's White, Ga., plant, where capacity is being expanded nearly 10% by January 2021 to 13.9 million passenger and light truck tires annually.
The production restructuring program will also involve transferring production from facilities in Malaysia and China to Japan to serve the local market.
"We are currently facing a period of upheaval which some say only occurs once a century," Toyo President and CEO Takashi Shimizu said.
"We will thrive by applying the abilities that we have accumulated to date to future growth, while on the other hand, identifying any shortcomings, and fully utilize what we have and treat this period of change as an excellent opportunity.
"Rather than simply trying to survive," he said, "we must take on the challenge of winning as our plan for growth heading into this new corporate stage."
Toyo's revised growth strategy coincides with the emergence of Japanese trading conglomerate Mitsubishi Corp. as a major shareholder and strategic business partner.
Tokyo-based Mitsubishi — which has partnered with Toyo in distribution since 1974 — raised its ownership stake in Toyo in November 2018 to 20% from 3.05% by purchasing 26.69 million newly issued shares for $452.5 million.
In China, Toyo expects to establish a "local production model for local consumption" and develop new products, while the Malaysian location — which is targeted for additional expansion to 9.8 million units annually — will serve as a "global hub," the company announced.
Toyo announced in July its plans for a Serbian tire plant with the capacity to produce 5 million units of passenger and light truck radial tires by summer 2023. Employing smart factory principles, Toyo said the unit would reinforce its competitiveness and reduce costs, in terms of logistics and raw material procurement.
Toyo also named duty-free export to the U.S., Europe and Russia, preferential duties as well as capable human resources with English ability among the reasons for choosing Serbia for its European production centrr.
Along with the new production base, Toyo is building a research and development center in Willich, Germany, that is designed to support its European operations. The center will collect automotive/market information and ensure that high performance tires are produced in alignment with the development of new materials.
The R&D unit will focus on refining high-performance technology development in Europe, through compound development, process and mixing technology as well as simulation technology and materials informatics.
In addition, Toyo is considering the establishment of a European proving ground in the near future, the company.
Bruce Davis, Tire Business staff, contributed to this article.