Kumho opens its first N.A. tire plant

MACON, Ga.—Eight years after the 2008 international financial crisis forced Kumho Tire U.S.A. Inc. to suspend work on its first North American tire plant, the tire maker finally opened the Macon facility—its ninth worldwide—on May 2.

The new facility's location, about 90 minutes southeast of Atlanta, allows the company to have a larger stake in one of the world's largest tire markets. North America accounts for 22 percent of tires produced globally, according to Kumho, which moved its U.S. headquarters to Atlanta from Rancho Cucamonga, Calif., in 2015.

“North America is home to one of the world's largest auto and tire markets,” said Park Sam-gu, chairman of Kumho Asiana Group, at the factory's grand opening ceremony.

“We believed a production base on this crucial continent is a must if we are to significantly expand our presence in the market in our bid to become a top tire manufacturer.”

About 300 people were on hand for the opening of the $450 million facility, including Georgia Gov. Nathan Deal and Macon Mayor Robert Reichert. Kim Seong-jin, South Korean consul general in Atlanta, and Lee Han-Seob, CEO of Kumho Tire Co. Inc., Kumho Tire U.S.A.'s South Korean parent firm, also were on hand.

“Along with this state-of-the-art facility,” Sam-gu said, “Kumho will put into place an advanced management system for day-to-day operations so that all employees can be proud of their company.”

The Macon plant, which opened with an annual capacity of 4 million passenger and light truck tires, is expected to serve as a foundation for enhancing the tire maker's market share in North America, according to Jim Frentheway, plant spokesman and director of human resources.

“The U.S. tire market is the biggest in the world. It helps us dramatically to be here, obviously,” he said. “Shipping from China or Vietnam is an expensive process, and it's more effective for us to be able to make them here.”

According to Frentheway, the company began shipping products to dealers in early May. He added that the facility is expected to reach its maximum daily tire output of 11,400 units by late June or early July. Staffing stands at 388.

Kumho noted the company's goal is to gain a foothold in the region's original equipment market and said it believes its Macon facility gives it the ability to grow. The new plant is located 184 miles from Hyundai Motor America's Montgomery, Ala., auto assembly plant, and Kia Motor America Inc.'s West Point, Ga., plant is just 110 miles away.

Frentheway said the company has set up audits with both Hyundai and Kia, as well as Fiat Chrysler Automobiles L.L.C.

“(OE) is where the lucrative business is,” he said. “We don't have as many changeovers. You have to have 100 different styles for the aftermarket, and for the OE market maybe 20, so it's fairly significant.

“Primarily, OE is what we're shooting at. We have inquiries now from a number of auto makers.”

Frentheway added that should the plant be successful, there is potential for phase two and phase three additions that would “double and triple the size of the place.”

“Discussions of phase two, I think, have already begun, but they're just discussions,” he said. “There's nothing confirmed as far as timing goes, and I think, again, they're looking at how well the market goes for this.”

Earlier this year, at Kumho's U.S. dealer meeting, Jim Mayfield, executive vice president of marketing and sales for Kumho Tire U.S.A., said that among the company's goals for 2016 is improving its efficiency, including working toward a better positioning strategy for its products.

“We've got an aggressive plan to launch new products in 2016, just like we did in 2015,” Mayfield said. “We're going to continue work on solidifying our pricing position and identifying where we really should be positioned in the market place.”

The company heralded its entry into domestic production when construction began in 2008 on the Macon factory, but following a global financial crisis, building at the site was suspended and ground to a halt before resuming in 2014.

The factory is equipped with six cutting-edge, second-generation proprietary tire building machines, dubbed Automated Production Unit II, which the company claims will help boost product quality and manufacturing efficiency.

The first iteration of this system can be found at Kumho plants in South Korea and Vietnam, Frentheway said, adding the new version is “a little faster than the original and has a couple less people to operate it.”

In addition, a new lot tracking system using radio frequency identification, combined with laser guided vehicles—unmanned carriers that move along pre-determined routes—ensure a fully automated movement of products, allowing for real-time production control on a strict first-in, first-out basis, Kumho said.

“I think a way to gauge the progress, over the years, of tire building would be that one of our competitors had a plant down here in Albany, Ga., that made about the same amount of tires we're projected to make a year—about 4 million. ... They had about 2,300 employees to operate their place. We're doing it with just under 400.”

Kumho entered the U.S. market in 1975 and opened its Kumho America Technical Center in Akron in 1990.

In his grand opening address, Sam-gu said Kumho's ultimate objective is to become a “beautiful company.”

“With this goal in mind, we will strive to create jobs and make technology transfers that ensure economic growth for the community, while simultaneously appreciating and respecting local culture in order to grow with, and make contributions to, the community,” he said.

“Additionally, Kumho Tire will make every effort to serve as a bridge between the Republic of Korea and the state of Georgia to foster an even stronger business relationship and to create an environment where Kumho, Georgia and Macon-Bibb County can grow together.”