ONOMICHI, Japan — Tire maker Yokohama Rubber Co. Ltd. is addressing overwhelming demand for mining and construction vehicle tires — and the shortage of supply in the OTR market — by more than doubling its capacity in the sector by 2011.
The Tokyo-based company unveiled a second off-the-road tire plant in Onomichi, located adjacent to its original 33-year-old factory, last month. Yokohama began construction on the facility in February 2006, and the factory will reach full production by October 2008.
Total capacity between the two OTR tire factories at the site will reach about 1,620 metric tons of rubber per month at that time, up from about 1,100 tons per month prior to the second plant´s construction, the company said.
Yokohama didn´t break down how many tires the rubber tonnage figures would translate to in the future because of the variety of sizes and demand within the individual markets. But Henry Sakurabayashi, general manager of the company´s OTR and Aircraft Division, said the 1,100 rubber tons per month the Onomichi plant was producing pre-expansion equaled about 7,500 tires per month, from 25- to 57-inch sizes.
Obviously, the plant makes more small sizes and fewer large sizes, he said.
Yokohama said it is "aggressively investing" to boost OTR tire sales and try to meet the demand brought on by a global "rush of resource development and construction." Specifically, the estimated $35 million expansion was planned to manufacture middle- to small-sized radial tires with diameters of 25, 33 and 35 inches, primarily for use in wheeled cranes and dump trucks in the 30- to 75-ton class.
The plant already has begun producing 25-inch tires and will phase in the other sizes over the next year.
When completed, the 118,000-sq.-ft. second plant will include radial tire building, a tire curing area, a material prep and cutting area, tire inspection capabilities and a warehouse. New equipment will include three radial tire building machines, a tire curing press and an X-ray tire inspection device.
Looking further ahead
While the expansion is a big step in the tire maker´s commitment to future OTR business, it is only the first phase of a plan to bolster capacity in Onomichi to up to 2,500 tons per month by 2011, according to Tooru Kobayashi, general manager of Yokohama´s tire planning division and a company director.
By the end of this year, for example, Yokohama will decide on the implementation of a $40 million-plus investment to increase production capacity of "super-large" tires-45, 51 and 57 inches in diameter-for dump trucks in the 100- to 250-ton class. A third plant at the Onomichi site, where there is room to expand, is a possibility.
The company also will expand capacity of middle- to large-sized tires to meet demand for large industrial vehicle applications, including handling ore at ports, underground mining uses and for dump trucks in the 30- to 100-ton class.
"Large-size OTR tires for construction vehicles and radial tires are in short supply worldwide, and this is a major inconvenience for customers," Kobayashi said at a dedication ceremony for the new plant, held Oct. 22 in Onomichi. "We want to expand our capacity by phasing up investment in plant and equipment for OTR tires — beyond this second plant."
The new factory´s focus on radial tires will increase the percentage of radial tire production out of the Onomichi site to about 40 percent, Yokohama said. Kobayashi said the company would like to have sufficient capacity to handle the high demand for bias and radial lines.
With future expansions, employment in Onomichi will increase in the next four years or so to anywhere between 400 and 600 from the current 300, depending on needs, Sakurabayashi said.
The Onomichi operation will concentrate on demand for OTR tires in non-domestic markets, including a large growing portion in North America, company officials said. Demand outside Japan makes up 75-80 percent of Yokohama´s rubber tonnage produced within its OTR tire business and about 69 percent of its revenues.
Sakurabayashi said the U.S. makes up nearly half of Yokohama´s export business, followed by the Australasia region with 13.7 percent, Europe 13.2 percent and Asia 8.7 percent. About 40 percent of Yokohama´s overall OTR capa- city is going toward the U.S.
Some of the tire maker´s up and coming markets include China, Russia, India and Brazil. China has the most overall potential demand, Russia has more mines than the U.S., Brazil has a plethora of iron mines and India has the second most coal mines in the world behind China, Sakurabayashi said.
The future in India is uncertain and perhaps a bit premature, Kobayashi said. Yokohama set up a sales subsidiary there last summer, and passenger tires are the first step.
There is potential, but more study is required before OTR tires become a top priority in India, he said.