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Editorial: Toyo may be exceeding expectations in North America

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The evolution of Toyo Tires' business and manufacturing footprint in North America is a case where the reality clearly has matched—or even exceeded—expectations.

When the Japan-based tire and rubber product maker released its 2014 financial report, its North American tire business showed growth of 15 percent last year to $1.34 billion. That left North America only about $30 million behind Toyo's tire revenue in Japan of $1.37 billion.

And if Toyo comes anywhere near its goal of adding another $250 million in North American tire sales this year, the continent most likely will set a milestone by surpassing Japan and becoming Toyo's largest region. While company officials may feel some pangs of sentimentality over its home base being surpassed by North America, the result is the fruits of an effort the company started years ago.

When it decided to build a tire manufacturing operation in the U.S. roughly a decade or so ago, the company did so wisely. It used a highly automated, modular manufacturing system that could be matched to the tires Toyo was selling. Its production process wasn't labor intensive, so human overhead was kept to a minimum.

The firm focused on the aftermarket with both its Toyo and Nitto brands, particularly larger-size passenger, sport-utility and light truck tire sizes, where shipping costs and logistics were becoming an increasingly expensive proposition for imports.

Toyo also built its factory in White, Ga., with future expansion in mind. The Japanese firm hasn't been shy to invest in the plant, but it has been calculating in its moves. As Toyo's tire sales have grown in North America, new production capacity has been added.

The tire maker sold more than 10 million replacement tires in North America in 2014, and sales have steadily increased in the continent since manufacturing was placed here. And as revenues have grown, the percentage of tires sourced for North America from the U.S. plant has risen as well.

While Toyo does still import some tires into the U.S., when a current 1 million-sq.-ft. addition is completed in White, annual production is forecast to surpass 8 million units by 2017. Total investment since its opening in 2005 is approaching $1 billion.

Looking back, it is doubtful Toyo officials could have drawn up a scenario better than the one that has played out.