PUNTA CANA, Dominican Republic—Kumho Tire USA Inc., which in November suspended construction of its first U.S. tire plant, said it has pushed plans for the project back by a year.
The struggling global economy is behind the delay of the facility in Macon, Ga. Officials of the subsidiary of South Korea's Kumho Tire Co. Ltd. plan to “sit back and re-evaluate how to best use that facility,” they said at a dealer meeting Jan. 22-26.
Jim Milhaupt, national vice president of sales for Kumho Tire U.S.A., reiterated the tire maker “has no plans to scrap it. It's just a matter of time when we want to make that plant a reality.”
About half the estimated 3.15 million unit annual output from the facility will be destined for original equipment customers, Milhaupt said, with plans to expand eventually into the aftermarket. However, with the U.S. auto industry in a tailspin, all bets are off.
For example, Kumho was scheduled to provide tires for Ford Motor Co.'s Fusion crossover vehicle, but that project has been halted. This action affected the decision about whether to go forward with construction of the Georgia factory, he said.
Meanwhile, dealers at the meeting at a resort in the Dominican Republic heard an optimistic message from Kumho executives. Echoing last year's presidential campaign, they declared “2009 has fast become the year of hope.”
Milhaupt said the company's hope theme—“Having Opportunities and Possibilities Everywhere”—would carry over into its business with dealers.
“We will behave differently than in 2008,” he vowed. “We will be looking at ... what are the things that we can do that will grow your and our businesses. Will we be able to do everything? Probably not.
“I look forward to re-establishing the relationships you've had with Kumho in the past. Our goal is to grow our business substantially over the coming year with your help.”
The Rancho Cucamonga, Calif.-based company has taken a hard look at creating the right team and has been conducting an evaluation of its management, customer service and inventory groups, the executives said.
The company has instituted a daily analysis of product flow for each of its warehouses and is sharing that information with its sales force. It also has moved from a minimum order requirement of 6,000 pounds to 2,000 pounds, with the goal of having product shipped within 24 hours.
Rick Brennan, Kumho vice president of marketing, has been in the tire industry 37 years, but admitted to dealers: “During 2008 the world changed more for us than in any year since I've been in this industry.”