Soo-Il Lee has led Hankook Tire America Corp. for three years now, and during that time the company has enjoyed its greatest growth both here and globally. In 2011, the American arm exceeded $1 billion in sales for the first time, and expects to reach $1.4 billion in the coming year.

Lee sat for an interview with Tire Review during the recent Global Tire Expo/SEMA Show, and talked about a number of issues, not the least of which was the potential for Hankook to build a tire plant in the Americas. Subsequent to the interview, Hankook revealed that it is considering a passenger and light truck/SUV tire plant in the U.S. that will begin production in the second half of 2015, and already is looking at potential locations for a $700 million facility.

What do you see as your biggest successes as president of Hankook Tire America? Looking forward, what are your goals for the next five years?
“Frankly there is no ‘biggest success.’ It’s still coming, I hope. We are an improving brand. We are going forward according to our schedule. This market is the biggest in the world and it is complicated, with different channels and a lot of different kinds of consumers. There are still a lot of things to improve with our brand. We have the right product and we are doing branding activities to improve consumer awareness. For the future, though, we are looking at building a factory in this country so that we can deliver better service, improve fill rates and delivery service, and reduce working capital needs for our dealers. Our dealers’ cost is our cost, you know, so trying to reduce our dealers’ cost is important to our partners and Hankook.”

Will the announcement of a plant in the U.S. come soon?
“It will definitely be. According to our projections, we will produce our tires in this market in 2015. The second half of 2015.”

So the new plant will be announced at the 2013 dealer meeting?
“(Laughing) I don’t think so. We have not decided the place where we will build it yet. We can talk about why we will have a plant, but we haven’t decided on a location.”

At the 2012 dealer meeting earlier this year, you announced plans for a new associate dealer program. How has that program progressed?
“We are newcomers to having an associate dealer program. A lot of our competition has this kind of program already. But as a kind of ‘new baby’ program for us I think it has been quite successful. We have more than 1,200 dealer locations enrolled already. It is a new program and we are going to make it better.”

Are you planning any major enhancements to the program?
“We’ve had some feedback from our dealers. There are some good things that they like, and some things they want us to improve. We’re going to take a look at everything at the end of the year. It’s only been six months since the program launched, so we will take a look at areas for improvement and make the changes needed.”

With the added tariff on imported China-made consumer tires ending, what was the impact on Hankook?
“I worried about the impact on pricing and maybe on demand from our dealers, but frankly speaking for the last two months for our brand, I don’t think there has been much impact. Demand has been okay, sales have been up for the last couple of months even though the market was down by double digits. We have been able to stabilize our business even though there has been a lot of price pressure in the market. For the last several years, we have invested a lot in our OE business – this past year we supplied maybe 3.5 million tires to automakers in the U.S., plus our OE positions on Korean cars like Hyundai and Kia that are imported to this market with our tires. So that OE business helped stabilize our demand in this market.”

Hankook has plants in China, and you had to change your production around when the tariff came into effect, is that correct?
“Yes, we have three there. Originally we brought in 60% of our tires from South Korea and 40% from China. So after the tariff came on, we changed that to 90% from South Korean and just 10% from China. Since then, we have added a new plant in Indonesia, so we will bring in more tires from that plant. So now it will probably be more like 60% from South Korea and 30% from Indonesia and a little more than 10% from China. We’re not looking to roll that back to China, even though we have three plants there. Ultimately those plants are for the Chinese domestic market.”

Hankook does very well in China, does it not?
“We were the Number One brand in China in terms of marketshare for something like the last 10 years. I don’t know the exact number, but we have done very well in China. The whole economy in China has been slowing down. We still hold the Number One spot there, but the growth rate is down quite a bit.”

Do you see the lack of that added tariff as a good thing or a bad thing for the U.S. tire industry?
“It’s an economic issue, yes, and there are some good things and bad things. One of the good things is price; maybe the consumers have a larger selection of tires to choose from with some lower prices. So for them it is good. But maybe there are some quality issues, too. There are some cheaper tires with poor quality, too.”

What is the impact on Hankook?
“Well, one thing is that we are bringing in another associate brand – Kingstar. What this does is give our existing dealers a lower price point product that is manufactured by Hankook so that they can compete with a third-tier priced tire. It does not have as broad a range of coverage, but the quality is as good as Hankook. We’re starting with a passenger line and then an HP line. These tires are being made in China, but they won’t be priced as low as some Chinese tires. We already supply this brand to a lot of other countries; it’s been sold in Europe for many years.”

Where will Hankook Tire America finish this year? And what is your sales goal for 2013?
“We will surpass $1.2 billion definitely this year in U.S. sales. And for 2013 we are targeting $1.4 billion.”

What things will Hankook have to do to meet that goal?
“A lot of marketing activities. As I said, in a couple of years we will have a factory in the U.S., so we will need more brand awareness and to grow brand equity in this market. We have been very successful with sports marketing, like with Major League Baseball. In 2011, we had behind-the-plate signage with 22 teams, this year it was 26 teams. This coming season we will add a couple more teams, maybe to 30 teams total. We’re looking at the upcoming World Baseball Classic, too. There is motorsports and NCAA sports. It’s a combination of things that have worked for us in the past, and some things that we have not tried. We are spending more on TV, for instance, with the NFL and college football. We were looking at doing more with NHL hockey, but because of the player lockout, we have set that aside. We also are looking at other motorsports opportunities, both high level and grassroots here in the U.S.”

Looking at 2013, how do you think the U.S. tire industry will perform?
“I think it’s probably going to be a carbon copy of what has happened this year. The only thing I see that can be different is with the tariff coming off and what happens with Chinese brands. I do think it will be more price competitive, more so than what it is, and supply is obviously coming back. I don’t see a tremendous amount that will be different from this year, just that there will be greater supply and the effect the tariff situation will have on everyone’s business.”

What obstacles are there for tiremakers and for dealers?
“All manufacturers will have to pay attention to what happens with the tariff off, because everyone has an entry level product. It will be interesting to see if manufacturers follow, go down or hold their position in the market. For us, our plan is to hold our position in the market and utilize our Kingstar brand to address that part of the marketplace. I think dealers’ challenges are going to be their inventories. We see a lot of dealers closely watching the value of their inventories. If the market and our competition continue to have ‘deals’ and those types of things, dealers are going to have to be very conscious about what they are ordering and what type of mix they have. From what I have seen, the dealers that are doing well are those who are really concentrating on the consumer. They are really taking care of the customer, and they are actually stealing customers from other retailers because of their service and attitude.”

Looking at the truck tire market, how is Hankook’s medium truck tire business doing?
“It has been tough, actually. Our global marketshare for truck tires is lower than for passenger and light truck. But this year there was big improvement. Our 2012 sales in the U.S. will increase by maybe 15% to 20% in quantity, not in value. Big improvement, but we need more improvement next year. Service is so important in this market. We want to gain more premium positions with fleets. We have a good range of products. For the last five years, we have tried to develop the right tires for this market. We have tested our tires with about a dozen fleets and have received good feedback. Our CPM is really good and all of our tires are EPA SmartWay verified, so that will help drive sales for us in key market segments.”

Where do you see Hankook’s place in the U.S. and Canadian tire markets?
“We are the Number One brand in terms of marketshare in South Korea and China, and we are doing well in Europe. There we have a much bigger marketshare than we have in the states. But for this market, as we talked about, we are improving. There are a lot of things to do to improve our brand awareness. When we have our plant on board, we will do much better. For Canada, we are doing well. In certain segments, such as winter tires, we have double-digit marketshare, but in all-season and summer tires we need improvement. We have a lot of things to improve, but we will do it step by step. The ultimate goal is to become a top tier tire company in this country and in Canada.”