TOKYO — Yokohama Rubber Co. Ltd. has made no secret about its goal to double annual revenues by 2017 — its centennial anniversary — as part of its Grand Design 100 management plan.
The tire maker posted sales of $4.25 billion in fiscal 2007 and would like its revenues to approach $10 billion 10 years from now. It also will work to increase operating income to more than $800 million from $180 million in 2007 and attain a 10-percent return on sales.
About 75 percent of corporate revenues are generated through tire sales, and Yokohama wants to keep that balance as it grows.
On the company´s off-the-road tire side, still a relatively small tire business within the company with about $160 million in sales per year, the goals are just as ambitious. Last month Yokohama announced it would more than double capacity at its OTR tire site in Onomichi, Japan, by 2011.
It plans to accomplish this by expanding production in at least two phases, bringing total capacity at the facility to 2,500 metric rubber tons per month, up from 1,100 tons when the initial project began last year.
Demand within the global OTR tire market is about 350,000 metric tons per year across all tire size lines, and the company expects that figure to nearly double to about 650,000 tons per year by 2017, said Henry Sa-kurabayashi, general manager of Yokohama´s OTR and aircraft tire division.
Several of Yokohama´s competitors-including Mich-elin, Bridgestone Corp. and Titan International Inc.-have announced or started their own capacity expansions in the OTR sector over the past couple of years, but overall demand still has far exceeded supply.
Keeping customers in mind
The keys to preparing to meet that kind of demand and the company´s 10-year corporate goals include continuing to develop outstanding technology and increasing the expansion rate in building production capacity, said Tooru Kobayashi, general manager of Yokohama´s tire planning division and a corporate director.
Technology is a major factor in differentiating the company from its competitors, in making high-quality products and delivering them to customers when they need them, Kobayashi said. And in the future, Yokohama has to "speed up" its expansions to match growing demand, he said.
For example, the Onomichi project took about two years to develop and bring to fruition, he said, and that type of time frame needs to be reduced to about one year to be effective.
The company has developed and completed a small-scale production system for its passenger and truck and bus tires, and the firm needs to have that kind of flexibility throughout its operations to handle changes in demand, whether it is up or down, Kobayashi said.
"Number one, we have to think about the customers," he said. "We´re small compared to the Big 3 (tire makers), and that means paying attention to customer satisfaction is most important. We need to be flexible in how we deal with them and their needs."
OTR tires built overseas?
By 2010, Yokohama wants to begin considering if and where an overseas OTR tire plant would be prudent, Kobayashi said. The company decided to develop the Onomichi site before going overseas in part because of the room to grow there, but more importantly it wanted to utilize its technology and research and development resources domestically at this stage, he said.
The U.S. is Yokohama´s largest export market for OTR tires. The company´s Yokohama Tire Corp. subsidiary already operates a radial passenger and light truck tire factory in Salem, Va.
Ideally, Yokohama would like to have a plant within each of its growing markets if demand calls for it. But the company would want to have confidence in the work force and the quality of skills before deciding to produce OTR tires overseas; it hasn´t seen that type of quality in each country, so there has been some hesitation to have capacity abroad, Kobayashi said.
Finding good people, though-especially young ones-remains a challenge in Japan as well as the rest of the world. Norio Karashima, president and CEO of Yokohama Tire, said the younger generation is showing less interest in tire industry jobs, and the company and industry overall will have to face some difficulties in meeting future needs.
Recruiting is getting harder, Kobayashi agreed, but newer high-tech plants like the one in Onomichi might help attract and retain good people. Sakurabayashi said the facility hired 50 with the initial increase in capacity of 25-inch tires, and the announcement of the expansion in Onomichi has spurred many employment requests from experienced and younger workers.