Another invasion of foreign companies setting up tire manufacturing in the U.S. is in full swing. This one, bringing more jobs and new facilities, is quite welcome.
Kumho Tire Co. Inc.'s decision to build a plant in Macon, Ga., brings another ``second-tier'' tire maker into tire manufacturing in this country. Toyo Tire & Rubber Co. Ltd. has operated a greenfield facility in White, Ga., since late 2005, and Yokohama Rubber Co. Ltd. has owned a former Mohawk plant for a number of years.
Can Hankook Tire Co. Ltd., Kumho's arch-rival in South Korea, be far behind? The company's newest factory, a world-class facility in Hungary, started up just last year, and the firm's hierarchy has said the company will disclose the site of a sixth plant before the end of 2008.
Pirelli probably can be added to that group, since it opened a high-tech factory in Rome, Ga., six years ago. That was something of a reloading, though, since the Italian company previously owned (and closed) Armstrong tire facilities it acquired in 1988.
The new plants are an interesting development that, in one way, sounds counterintuitive.
Tire manufacturing in the U.S. has declined precipitously during the past few decades. General-purpose passenger tire production has been migrating from this country to lower-cost regions. That's a trend that certainly isn't about to change.
The inauguration of tire manufacturing by Toyo and now Kumho, however, has some differences.
Both companies have been building business in the U.S.-Toyo to about $675 million in 2006, and Kumho $565 million in 2007. Hankook, incidentally, had sales of $751 million in the U.S. last year.
It can be difficult and expensive to supply American customers strictly from abroad. Fill rates remain a critical issue for tire manufacturers' distributor and dealer customers, and tire makers-including the big boys, Goodyear, Bridgestone and Michelin-know they must meet customer demand.
With transportation costs soaring, a tipping point eventually is reached when it makes sense for a foreign tire maker to set up manufacturing in this country, particularly for higher-end and heavier truck tires. It seems Kumho and Toyo reached that point, and Hankook may soon be there, too.