Kumho Close to US Tyre Plant Decision

(Akron/Tire Review) Kumho Tire Co. is indeed planning to build its first US tyre plant, and hopes to announce its location by the end of this year. Dr. Sae Chul Oh, Kumho’s president, revealed the plans at last week’s SEMA Show in Las Vegas. Company officials said that as many as five locations in Georgia and Alabama are being considered. The South Korean tyremaker is seeking a location that gives it the best access to US auto plants, a skilled labor force, optimum labor costs and ample access for workers and management. The plant will be based on Kumho’s modular Automated Production Unit technology, which it unveiled a few years ago in South Korea.

At the same time, Oh said, the company is also considering a plant for Europe. Oh said that for now only one will be built, and it appears the US is the first choice. A European plant would most likely be located in Eastern Europe.

For 2007, Kumho expects to post sales of US$600 million in sales, and has set a goal of $800 million in sales for 2008 and has set an initial 2009 sales goal of $1 billion. Corporation-wide, 2007 sales will come in around $2.6 billion. To meet the US sales goal, Kumho will be bringing in more products from its new plants in China, including some one million additional light truck/SUV tires. While Kumho is not expecting growth in the US medium truck tyre market in 2008, its newest plant in China will allow the company to bring as many as 100,000 additional units to the US in 2009.

Globally, Kumho has an annual tyre capacity of 59 million units, of which 10 million are sold in the US, the company said. Sixty per cent of those tyres currently come from Kumho’s China plants. Oh said the company is looking to reduce its reliance on its older South Korea plants and increase reliance on new plants in other countries. “The old Korean factories are not as efficient as the new factories,” Oh said. “We want better profitability, and our Korean production is not profitable enough. We can improve profitability with new, more efficient factories.”

Currently, 50 per cent of Kumho’s capacity in China is exported to Europe and North America, the rest remains in China. Oh said Kumho may build another plant in China – the company has three there now – or expand its capacity there at existing plants. “We are focusing on the Chinese market with our factories in China,” Oh said. “We want to expand our LTR and UHP business in China. The Chinese market is experiencing 18-19 per cent growth each year. That is why we will focus much of our Chinese production on that market.”