FULLERTON, Calif.—When Takayuki Hamaya was president of Yokohama Tire Philippines Inc. in 2011, he helped put together a three-phase, six-year project that eventually more than doubled the firm's Philippines tire plant.
Two years later, the 21-year veteran of the firm has moved on to top posts at Yokohama Tire Corp., the first phase of the elaborate Philippines' project has been completed, and he and the firm's U.S. customers soon will reap the benefits of the factory's expansions.
Currently based at Yokohama Rubber Co. Ltd.'s North American headquarters in Fullerton, Hamaya recently was named chief operating officer of Yokohama Tire. That adds substantially to his wide-ranging responsibilities as executive vice president and chief financial officer. He heads the firm's consumer, commercial, off the road and original equipment divisions.
The three phases of the Philippines factory expansion are costing Yokohama Tire Philippines an estimated $520 million and expected to boost its annual production from 7 million to 17 million tires by 2017 when the projects are completed, according to Hamaya. A majority of the tires produced at the facility, which focuses heavily on light truck tires, are earmarked for the U.S. market.
Phase one and phase two of the Philippines project consist of adding 3.23 million square feet to the 1.72 million-sq.-ft. facility. The expansions will put the plant at 4.95 million square feet, about 2.8 times larger than its former size. New machinery is being added at the site, and the factory work force ultimately will experience significant growth, said Hamaya, who has worked in both sales and manufacturing along with accounting and corporate planning at the tire maker.
The first phase was completed in February and adds a projected 3 million tires to the factory's capacity. The second portion of the project, launched the same month, will boost capacity by an estimated 2.5 million tires when it is finished in 2015, he said.
Yokohama Tire also will draw a good deal of production from its Salem, Va., tire facility. "The cost structure is greater (there) than at our other plants," Hamaya admitted, "but without it, Yokohama Tire would face higher costs. This is where pricing strategy becomes imperative. When we make key products, whether at our Salem plant or elsewhere, they will simply need to be priced right."
Further expansion of the Salem facility is constrained by space, he said, so the company will continue to bolster the factory's capabilities with increased production efficiencies. Specifically, production lead time has been targeted, which he said will allow the plant to be more agile in responding to customer demand while cutting costs.
"The Salem factory enables Yokohama to be highly responsive to the U.S. market," according to Hamaya. "It gives us increased flexibility and speed, deploying production adjustments as needed by the changing requirements of our customers."
The expansions at the Philippines plant were put in place "to implement business plans set in the third phase of the Grand Design 100, which is Yokohama's medium-term management plan set to culminate in 2017 on the company's 100th anniversary," Hamaya said. The tire maker wants to reach $10.4 billion in revenues by 2017.
Additional expansion plans for other Yokohama facilities are in the works at the firm's sites in Russia, Thailand, India and China.
Hamaya said a primary focus is to make products in the right quantity and at the right time. "This will allow us to be truly responsive to the market while maintaining strong efficiency."
One way he believes Yokohama Tire can accomplish that is through precise forecasting, which he sees as a critical component. Looking at the company's supply and demand globally would be another, he said, since it would create an unprecedented level of flexibility for the firm as it focuses on what to produce, when and where.
The executive said Yokohama "will heighten the integration between our sales and product planning functions to attack the market powerfully with products that meet the U.S. needs."
The U.S. market is different than that of Japan and Europe, Hamaya said. About 50 percent of the consumer tires purchased in the U.S. are for trucks and SUVs, much higher than in any other country, he said. There are also more requirements for tires with all-season capability and long mileage in the U.S.
In Europe, drivers may not care as much about how long a tire lasts as they do about the tire's performance at higher speeds, he said. "Overall, in terms of tire performance and technical requirements, producing the right tire for the U.S. market is more difficult than anywhere else."
The consumer tire end of the U.S. market is currently a bit weak in terms of sales, Hamaya said, because "the competitive space is much more crowded, and the diversity of the product and price range adds to the volatility." It's another reason why getting the product mix right is critical, he said.
In early 2012, he said the tire industry fared well when it came to supply and demand. But in the second half of the year, demand began to slow, which led to lower prices and some price wars. "Everybody's business suffered. Companies were forced to spend more money to gain market share, and that cut profit."
Slight improvement is expected globally in the industry in 2013, according to Hamaya. Yokohama could fare quite well, he said, because strong customer confidence exists, and he's optimistic the company will have positive results in its consumer, commercial and OTR divisions as the year rolls on.
Aiming for growth
The firm has aggressive growth and supply plans in the works that he believes will strengthen its position this year and beyond.
"The global recession did not hit the U.S. as hard as it did Europe and China," Hamaya said. "Accordingly, inventory allocations will be prioritized to the U.S."
He expects the U.S. market, in particular the passenger car segment, to have better results overall in 2013 compared to last year.
On the light truck tire side in the U.S., he said the sector previously was constrained by supply but will grow "thanks to initiatives we have put in place to increase our production capacity."
Yokohama Tire expects to see its sales to dealers and sales by its dealers climb above expectations, he said.
Globally, Yokohama is strong in the Japanese domestic market, but the competition continues to grow, the executive said. "So we're looking for new opportunities, like China, India, India, Russia … and the U.S. We look at the U.S. market as a prime opportunity."