SHANGHAI, China — Shanghai Tyre & Rubber Co. Ltd. doesn´t want to be thought of as a Chinese tire maker.
It´s not that the Shanghai-based firm isn´t proud of its Chinese heritage. It just sees itself as different from many of the country´s other government-owned tire makers that, rightly or wrongly, are viewed by many as producing lower quality, competitively priced tires.
The firm-along with its wholly owned U.S. sales and marketing unit, China Manufacturers Alliance L.L.C.-wants to be recognized not as a third-tier, low-price tire manufacturer, but as a second-tier maker of high-quality radial products.
"Our product, as far as quality is concerned, can compare to the good brands in the market," said Mike Yang, president of Monrovia, Calif.-based CMA. "Our only weakness is brand awareness."
This could be changing, judging by recent visits to the company by a large North American manufacturer seeking a possible supply arrangement and a major tire maker considering an outsourcing deal.
Among other visitors to the company were officials from Memphis, Tenn.-based private brander Del-Nat Tire Corp., who were on the third leg of a tour of about 15 tire plants.
"We´ve seen plenty of plants this trip that have the same equipment," said Del-Nat President Ed Fabrizio. One difference between them and Shanghai Tyre, he said, is in how the employees operate the machinery.
"I see a lot of confidence in the people in operating the equipment," he said during a tour of Shanghai Tyre´s Double Coin Heavy Duty Radial truck tire plant. "In other plants we´ve seen, the people are tentative in their operation of the equipment. They don´t seem to have the same experience with the equipment (as the Shanghai Tyre workers)."
Another example of Shanghai Tyre´s growing status is the signing of its first major original equipment fleet contract in the U.S. with Navistar International Corp. The truck and bus manufacturer will use Shanghai Tyre´s Double Coin radial truck tires on some models of its International Truck vehicles and IC Corp. school buses.
Such contracts are tough to secure, Yang said, but because they are, they are a "kind of symbol that your product is at a very high stage."
Shanghai Tyre, through CMA, is shipping about 20,000 Double Coin brand radial truck tires a month for fitment on several International Class 4-8 truck platforms.
"We have everything that´s required by OE," Yang said. This includes a network of 950 service points throughout the U.S., Canada, Mexico and Puerto Rico, and a field engineering team to service them.
Shanghai Tyre is China´s third-biggest tire manufacturer and the world´s 19th largest. It had sales of $799 million in 2006, up 25.4 percent from 2005, and projects that to increase to almost $1 billion in 2007.
The company is 60-percent owned by Huayi Holding Group, a Chinese government company, and has a portion of its shares listed on the Chinese stock exchange. It operates four tire plants and a tube factory, all in China, making truck, bus and OTR tires sold under the Warrior brand name, as well as Double Coin.
The firm´s Double Coin tires command a higher price than those of other Chinese manufacturers, Yang said. "Our product image is more well-known and our product line is as good as any major brand."
Until 2001, Shanghai Tyre operated a passenger and light truck tire plant in Shanghai, but it sold controlling interest in the factory to Michelin. It retains a 30-percent share in the firm, Shanghai Michelin Warrior Tire Co. Ltd., with Michelin owning the rest.
The company´s newest factory is in Rugao, Jiangsu Province, a three-hour drive from Shanghai. It opened in 2005 and produces radial medium truck tires at a rate of 1 million a year, with a goal of 3 million units within three years.
It makes 50,000 radial OTR tires annually and has several automated OTR tire building machines designed in a joint venture with an engineering company in China. The plant serves both domestic and international demand with room for expansion, Yang said.
The firm´s other plants-all in Shanghai-are the Double Coin Heavy Duty Radial Factory, Ta Tsen Tire Factory, East Sea Tire Factory and Si Jing Rubber Tube Factory.
In 2006, Shanghai Tyre produced a total of 3.5 million medium radial truck tires, 50,000 radial OTR tires, and 1.6 million bias truck and bus tires, according to Chun Chen Yue, general manager of Shanghai Tyre. The company also makes radial and bias industrial lugs and skid steer tires.
This year, those numbers are expected to increase. Radial OTR tire production is forecasted to double to 100,000 tires as the company introduces more sizes. Radial truck tire production is predicted to grow to 3.8 million units, while bias truck tire should stay flat.
Much of the output from the Rugao plant is slated for North America, the company´s largest export region. Shanghai Tyre through CMA has grown in the area to $171 million in sales in 2006 from $40 million two years earlier.
CMA expects to show similar growth over the next three to four years, said CMA CEO Larry Williams. The firm plans to expand its offering of truck and bus tires, and he anticipates big growth in OE tire sales to fleets and bus companies.
CMA also is gearing up its OTR business. In 2006, the company sold 28,000 OTR tires in North America and recently established the Double Coin Giant Tire Radial OTR Division. The unit is headed by former Continental Tire North America Inc. executives Ray Tremblay and Rick Johnson.
Yang likens CMA to Bridgestone Corp. in the early 1980s when the Tokyo-based tire maker had about a 3-percent market share in the U.S.
He said the company is the only Chinese tire maker with its own sales and marketing office in the U.S., unlike other firms that sell through brokers.
Yang said Shanghai Tyre values its export market, guaranteeing 50 percent of its production is earmarked for domestic sale and 50 percent for export. This will not change, he said, even if profit margins in the domestic market turn better than export.
The company sells its tires in 60 countries and regions, with Europe and Australia the second and third largest areas.