NAPA, Calif.—As mid-year approaches and the weather across North America heats up, the cold and flu season seems to be a fleeting memory.
It's much like the days when Nexen Tire America Inc. was prone to any industry or customer malady.
John Hagan, executive vice president of the Seoul, South Korea-based tire maker, used an appropriate analogy to describe the company's immune system now in place to fight off industry infirmities.
Today, the emphasis is on a balanced distribution network.
"We had some large customers in the past, that if they got a cold, we got a flu," Hagan said. "Now if they get a flu, we get a flu.
"My goal is, if they get a flu, we get a cold. Or we get the sniffles."
Nexen, he said, continues to post double-digit growth in sales—a trend that has continued in the first quarter of 2019—and has set a goal to secure 3.25 percent market share in the U.S. by 2020. The tire maker has its sights set on cracking the Top 10 in global sales by 2025.
In Tire Business' 2018 Global Tire Report, Nexen Tire Corp. ranked 20th in total sales, at $1.65 billion. Hangzhou, China-based Zhongce Rubber Group Co. Ltd. held the 10th position with sales of $3.62 billion, more than double Nexen's.
Hagan shared that vision with 26 dealers—including two dozen direct tire dealers and two associate dealers—and their companions—during a five-day dealer appreciation event, held in April in California's Napa Valley.
He hoped the dealers left wine country not only with a greater affinity for fine wines—it seems as if every parcel of land in the valley not part of a winery or business grows some variety of grapes—but also with a clear understanding of where the company is and where it intends to be.
"Hopefully they leave here with what they came with: Confidence in Nexen, confidence in the direction where we are going and confidence we will take care of them through thick and thin, no matter what," said Hagan, who has been part of the tire industry for more than three decades.
"Our No. 1 goal is to try and have a consistent relationship, but also a supportive one. A lot of these dealers, if not all of them, come to the table knowing that you throw the problem on the table, you work the problem. Sometimes you win, sometimes you lose, but at the end of the day, we're here for each other to be successful."
When Hagan joined Nexen at the end of 2016, after a career that included stops at Linglong Tire Co. Ltd., Kumho Tire Co. Inc., Toyo Tire & Rubber Co. Ltd. and Pirelli Tire L.L.C., he said he found some complacency and a sense of entitlement.
"We pretty much switched it out where everyone is held accountable for everything they do," Hagan said. "It's instilled in their mind hopefully, that accountability is the key to everything,"
Today, he said, employees who provide sales forecasts must stand by those numbers. They review data daily, monitoring what was delivered and what wasn't.
"The sales team is always trying to learn from yesterday," he said. "We've done a very good job of learning from the past to help build our future."
Most recently, he hired another industry veteran, Megan Wentz, as marketing manager.
"We've talked over and over about creating some continuity, consistency and longevity, with our planning," Wentz said. "The big priority with me is making sure this plan is for the next five or seven years and beyond."
Hagan attributed Nexen's resurgence to a variety of factors. The first is strong products.
Hagan told dealers that since 2000, Nexen has sold 395 million units without a recall.
He mentioned three products as standard bearers: The N Priz AH8 grand touring all-season tire; the Rodian MTX mud-terrain tire; and the Rodian AT Pro RA8 all-terrain tire.
The N Priz AH8, which debuted in 2017, is available in 59 sizes, in 14 to 19-inch rim diameters, and it features a 70,000-mile treadwear warranty. "The thing just runs," Hagan said. "There's nothing negative about that."
The Roadian MTX, launched at the 2017 Specialty Equipment Market Association Show in Las Vegas, can "run with the big dogs," Hagan said, referring to the Tier 1 manufacturers.
"We priced it competitively with the value that speaks for itself," he said. "But like any tire manufacturer, when you introduce a new line, you want to go from zero to a million. With this segment, we didn't take this approach. We said, let's get out to dealers...so dealers have to speak on the tire."
The Rodian AT Pro RA8 also was designed to go after the Tier 1s at a lower price point. "It just keeps on growing double digits every year," Hagan said. "It's been very good for us."
Nexen recently forged a partnership with TBC Corp., which includes wholesale and retail locations.
Investment, both in North America and abroad, is another key factor for Nexen.
In the last year, the tire maker opened a $1 billion tire plant in Zatec, Czech Republic, that will supply Europe and other areas abroad.
While the plant won't produce units for North America, Hagan said it would free up capacity at Nexen's two plants in South Korea. And that's important, he said, to help maintain the company's fill rates, which he said are north of 95 percent. In fact, he said the company only recently initiated a back-order system.
"There is no need to have a system before," Mr. Hagan said. "I could argue there is no need now. We have two warehouses, and if we can have a back-order system that can help us and get as close to 100 percent as possible, it makes us better in the long run."
Nexen has inaugurated a 613,000- sq.-ft. central research center in Seoul that will become the company's hub for its R&D centers in the U.S., Europe and China.
The tire maker invested $178 million over two years in the center, called "Nexen UniverCity." The structure stands eight stories tall with two additional stories underground and consumes an entire block in Seoul.
It also is putting the finishing touches on a North American R&D center in Richfield, Ohio, just north of Akron.
The tech centers, he said, are helping to boost Nexen's burgeoning original equipment business, which increased to 3.5 million units in 2018 from 600,000 in 2013.
Nexen has fitments with Hyundai Motor Co., Kia Motors Corp., Honda Motor Co. and Fiat Chrysler Automobiles in North America and in Europe with, among others, Volkswagen A.G. , Audi A.G., Mercedes-Benz A.G. and Porsche A.G. In fact, the tire maker said it has fitments with 152 total models globally, including 32 in the U.S.
Finally, Nexen wants to focus on its Associate Dealer program.
Hagan said the program took shape in 2008 and is beginning to take off this year.
"We created a strong, simplistic program," he said. "...It's consistent, it's fair, and it enables growth."
He said many other programs "are just worried about growth, worried about you're buy in. I don't believe there is another program that actually goes soup to nuts."
Hagan said the software for Nexen's Associate Dealer program is built to include direct-to-consumers sales. But, he said, that won't happen.
"We have dealers. We have distribution," he said. "We support that. They're the ones that should be (selling tires)."
Hagan said it's extremely important for Nexen to keep the lines of communication open between the tire maker and its dealers. He said the goal is to respond to any issue within 24 hours.
He likened the relationship to a marriage.
"Throw the problem on the table, let's look at it and find a solution," he said. "Let's be big, and if there is no solution, let's move on. We go in with this attitude: We've always found a solution."
Hagen said Nexen was once considered a low Tier 2 or Tier 3 product. Today, he asserts, it remains a strong Tier 2, a diamond in the rough.
"We have been, for years, flying under the radar," he said. "I think 2019 is the year we don't fly under the radar anymore. ...We're in the air."