Hankook: ‘Local-for-local' supply underpins growth strategy

NASHVILLE, Tenn.—For the time being, it's Lucky No. 7 for Hankook Tire & Technology Co. Ltd. The Seoul, South Korea-based company is the seventh largest tire maker worldwide and No. 7 in North America as well, based on reported sales revenue.

Business in North America, after the COVID-19 plunge in 2020, has rebounded strongly since, with sales up 13.6 percent in 2021 versus 2020 and up 22.5 percent in the quarter ended March 31.

As such, North America now accounts for 28.5 percent of Hankook's global sales, and company management—led by President Curtis Brison—intends to keep the trend moving in that direction by recruiting new dealers, solidifying relations with existing dealers and doubling the production potential of the firm's sole U.S. tire plant, in Clarksville, Tenn.

Brison, a former Michelin North America Inc. executive who was promoted to president of Hankook Tire America Corp., told Tire Business, a sister publication of Rubber News, in a recent interview that the company has lofty expectations in the region, based on the parent company’s commitment to a “local-for-local” supply strategy, a growing dealership base and consistent companywide efforts to be on the leading edge of technology.

One of the most visible examples of Hankook's commitment to North America is the company's decision in February 2021 to invest $85 million to more than double the annual capacity of its 5-year-old Clarksville plant to nearly 10 million passenger and light truck tires when the project is finished in late 2023 or early 2024.

That announcement coincided with the decision by the U.S. Commerce Department to impose elevated import duties on consumer tires from South Korea, but Brison stressed that the decision to expand Clarksville was made well before the import-duty declaration.

The Clarksville expansion "is part of our direction, part of our goals. … We are seeking aggressive growth in this market," he said. "We have a lot of opportunities and believe there is room for growth for us.

"We tell those we're recruiting to work for us that they can be part of something special."

The plant itself "represents our commitment to the U.S. market," he said. "Local-for-local approach to manufacturing is integral to our global manufacturing strategy, … to deliver inventory locally to satisfy local demand."

Brison acknowledged that economic and supply-chain issues are headwinds for expansion, but "we see local-for-local as a winning strategy now and moving forward."

While Hankook's supply from its factories in South Korea and in China is impacted by U.S. import duties, the company is working to take advantage of capacities at plants in Indonesia and Hungary to fill gaps.

"We feel very good how we've managed it so far, … managing to shield customers from the impact of that action," he said. "We're considering various countermeasures, mostly diversifying production sites for products sold in the U.S. We're dedicated to providing high-quality products on time and in full regardless of the tariff fashion."

Building business in North America means having a strong dealership base, Brison said, and Hankook is active on that front as well.

"We're building strong relationship with all our stakeholders — direct customers, associate dealers, end users," he said. "Our sales programs focus on improving the ease of doing business in all areas, compared with the past few years. Our direct programs feature more digitalized processes, increased communication about products and promotions, etc."

On the associate dealer side, Hankook offers the Hankook One program, which consists of three initiatives, Brison said, sales-related support, marketing support and direct communication support.

"We're consistently adding improvements, new offerings as the product stream grows. We're happy with our growth plan, … and looking forward to growing and supporting an outstanding customer base."

To that end, Hankook is working to overcome delays and hiccups in getting product to customers, Brison said, as it deals with supply-chain bottlenecks at several points, from ports to distribution centers and then on to customers.

On the product side, Hankook's latest development is the Ventus S1 AS all-season high-performance tire launched recently in North America.

The new product — being manufactured to a high degree in the U.S. — can be considered the successor to the Ventus S1 noble 2 and will be sold alongside the Ventus V12 evo2 and Ventus V2 concept2 tires in Hankook's performance tire lineup.

The new line — which launched in 75 sizes covering 16- to 22-inch rim diameters — is targeted at owners of performance cars, sports sedans and luxury cars, as well as popular CUVs and SUVs. Hankook estimates UHP all-season tires represent about 10% of the total U.S. passenger tire replacement market and demand is growing at an average annual rate of about 5%.

"The ultra-high-performance all-season segment is becoming one of the most innovative and exciting markets in the industry," Brison said at the product's launch in March.

"The Ventus S1 AS showcases the level at which Hankook can engineer a single tire to perform across a variety of seasonal road conditions and satisfy high-performance driving benchmarks."

Later this year Hankook will roll out in North America the "iOn" line of tires developed for electric vehicles (EVs), sales of which are increasing exponentially.

The line, which features lower rolling resistance and noise than comparable existing tire lines, launched in Europe earlier this year in summer and winter iterations. An all-season version, the Ventus iON A, is being developed for North America.

The line also is engineered to cope with the instant torque drivetrain characteristics of most electric vehicles. All three will be available in a size range covering 18- to 22-inch rim diameters.

Supporting these new products is a culture of research and development at the corporate level. Hankook recently christened a 310-acre proving ground in Taean, South Korea, that features 13 test tracks.

Hankook said the facility, the largest in Asia, will be instrumental in testing the company's next-generation products, including tires for electric vehicles ranging from supercars to trucks and buses, allowing speed tests to reach 155 mph.