LAS VEGAS—South Korea's Hankook Tire Co. Ltd. is planning its first tire plant in the U.S., with it expected to start production before the end of 2015.
Hankook Tire America Corp., the South Korean tire maker's U.S. sales company, has narrowed its search for a North American facility to sites in the U.S. but hasn't selected the specific state, company executives said during an interview at the 2012 SEMA Show, Oct. 30-Nov. 2 in Las Vegas.
"Our prediction is to produce here by the end of 2015," Hankook Tire America President and CEO Soo Il Lee said.
The company will spend about $1 billion to construct the plant in two phases. The first—costing about $700 million—will create a manufacturing operation capable of producing 6 million passenger and light truck tires a year.
"After that we will decide where to go," Lee said. That decision could mean doubling the size of the factory to 12 million passenger and light truck tires or adding production for truck and bus tires, he said. The second phase will cost about $300 million.
The plant is still in the planning stages and an official announcement is not expected until next year. It all depends on how the negotiations go with the states where the plant might be located, said Calvin Pak, Hankook vice president of marketing.
"We have a very long list and (we'll see) just how fast we can negotiate," he said.
The new factory will be highly automated and initially employ at least 1,500.
Hankook's desire for manufacturing capacity in the U.S. follows recent strong growth in North America.
Last year, the tire maker reached the milestone of $1 billion in sales in the U.S. and this year it is on pace to improve by another $200 million. In Canada, Hankook's sales for 2012 should be in the $150 million to $200 million range, Lee said, and those in Mexico could climb by 30 percent to between $70 million and $80 million. Altogether, Hankook should post sales of about $1.5 billion in North America in 2012.
Lee said the quality of the company's products are behind its sales growth spurt.
Hankook invests 5 percent of total sales in research and development, he said. "It is kind of an objective opinion of our dealers (that) they are happy about our quality," he said. "In the tire business, without quality nobody can be successful."
Another factor is Hankook's investment in the original equipment tire business, Lee said. This year the company will ship 4.5 million tires to vehicle assembly plants in North America—3.5 million to U.S. plants and 500,000 tires each to original equipment customers in Canada and Mexico.
Hankook has gained several OE customers in theU.S.in the past year, including recently announced fitments on Ford Motor Co.'s Lincoln MKZ and the all-wheel-drive versions of the Chrysler 300 and Dodge Charger SXT, SXT Plus and R/T models.
The company also fits tires on a number of Korean-built vehicles from Hyundai Motor Co. and Kia Motors Group and on some premium cars from Europe, including BMW A.G., Volkswagen A.G. and VW's Audi brand.
"This kind of OE presence helps (drive) a lot of business in the aftermarket," Lee said.