SEOUL, South Korea — Hankook Tire Co. Inc. must expand its presence in North America and improve its brand image globally if it is to hit its goal of becoming the world´s fifth-largest tire maker by 2010, according to the company´s top executives.
"If successful in the U.S., we will be successful all over the world," said Seung Hwa Suh, Hankook president and CEO, speaking recently at the firm´s global headquarters in Seoul.
In North America, where Hankook reports sales of about $700 million, the company sees its lack of brand awareness as a major obstacle to growth, Suh said. To address the issue, the South Korean tire maker plans to launch a television advertising campaign next year and is searching for a global ad agency to handle the account.
Participation in motorsports will enhance brand awareness, Hankook executives said. In North America, the tire maker is the official tire supplier for the National Auto Sport Association´s U.S. Touring Car Championship and supports other racing venues, supplying about 3,000 racing tires annually.
The manufacturer also is active in motorsports in China and Europe in a variety of ways.
"We will continue to invest in marketing and branding in strategic markets and try to drive more traffic," Suh said.
In North America, Hankook intends to concentrate on developing sales via retail outlets. "We are developing our sales in retail rather than wholesale," Suh said.
Suh, who until March was in charge of Hankook´s European operations, said by selling to retailers the company gets "live market understanding."
Simultaneously, Hankook is pushing original equipment business. "If you pass what OE companies require, you basically can make tires that the customer really wants," said Hyun Shick Cho, the company´s chief marketing officer.
Hankook supplies Ford Motor Co. and General Motors Corp. in Europe, North America and Asia, and starting this year will supply Chrysler L.L.C. with 200,000 tires globally.
"When we are working with OEs, we are working globally," Cho said.
Hankook will begin supplying Audi A.G. in China later this year, a contract the company hopes could lead to more business. "Once we meet the Audi spec in China, same spec for Europe," Cho said, which means there´s a good chance the firm will be supplying tires to Audi in Germany next year.
To support its ambitious sales goals, Hankook is in the midst of several plant expansions and upgrades to its research and development capacity.
Heading the list is a $246 million expansion at its Geumsan, South Korea, plant designed to double the annual capacity for ultra-high-performance tires to 10 million units by 2010.
In China, the Jiaxing plant will increase production to 21.9 million tires annually by 2010, and the company began production earlier this year at its newest plant, near Dunajvaros, Hungary.
Asked whether Hankook plans to build a manufacturing base in North America, Suh replied: "We don´t have a formal plan in North America. (But) we have to increase our product capacity significantly."
Phase 1 of the Geumsan expansion will be complete by February, Hankook said, adding 4,000 tires per day. Phase 2 will be complete by October 2009, pushing production up by 16,000 tires per day.
The plant makes 45,600 tires per day, of which about 40 percent are UHP tires and the rest standard passenger radials. The expansion will add more than 190,000 square feet of factory space.
In China, rolling expansions at the Jiaxing plant will increase the size of the plant nearly 20 percent and push production to 21.9 million tires annually by 2010, according to Park Jung Wha, vice president and general manager of the Jiaxing plant.
UHP tires account for 25 percent of the plant´s daily output of 60,000 tires, he said.
"We aim to be the largest in the world," Park said regarding tire production at the plant.
In addition, Hankook´s passenger, truck and farm tire plant in Jiangsu Province, China, also is undergoing expansion to 35,000 units a day by year-end.