As sunshine washed over the pristine beach of Los Cabos, Mexico, Hankook Tire America dealers and distributors huddled inside a Hyatt Ziva resort conference center ballroom to hear a business-meeting update from the growth-focused Korean tiremaker.
Shawn Denlein, Hankook’s senior vice president of sales for North America, took the stage to open the Feb. 11 dealer meeting, providing a detailed update on the progress, plans, and promises of the company’s efforts to grow global market share in an increasingly competitive environment.
“Every year when I get up here, I think about what I want to say,” shared Denlein. “As I thought about the message here, one of the things that’s most important as many of you have heard me say before, our goal is to be a global top-tier brand.”
Denlein explained the several elements to become top-tier include: logistics and having a strong distribution and production network; marketing investment to build consumer awareness and demand for Hankook tires; R&D and being on the cutting edge of development; and strength in OE, of which Hankook has fitments on 250 models across 27 vehicle manufacturers.
Currently, Hankook sees itself ranked as No. 7 among tiremakers globally. Their goal is to break through to 5th place by 2020.
Last year sales were steady at $5.7 billion globally, up by less than half a percent over the previous year. Denlein also shared what he describes as “balanced” percentages of sales across areas globally, providing what he describes as economies of scale and stability in the event of a region-specific concern.
Yet even in what many describe as a flat marketplace, the tiremaker remains focused on growth and climbing its way higher as a tire brand.
To accomplish this, the company has shifted and increased global production, which will soon include the opening of its new plant in Clarksville, Tenn., expected to come fully online in April 2017. Phase one of production at the new facility will create 1.7 units in 2017 to feed the replacement tire market. The tiremaker plans to increase production to 5.3 million units for both OE and retail accounts in 2018 and 11 million units in 2019. Currently the location has 300 employees, growing by 1,000 people by the end of this year.
Denlein shared that last year production was approximately 103 million units globally, making Hankook the fifth largest tire producer in 2016. He added that the company expects to produce 130 million tires globally in 2020 as the brand continues to grow.
The opening of the Hankook Technodome last year is also part of the plan for marketplace differentiation. The $244 million R&D facility in Daejeon, South Korea, houses 1,100 research professionals and staff. Denlein said the company also invests 5% of global sales to R&D to fuel innovation.
Seeing technology as a differentiator, Denlein said, “When you look at a basically flat industry, we’re investing in a plan when most people are pulling back. We find this a time to move forward to further differentiate ourselves and take that next step to become a top-tier brand.”
Layering more onto an already busy year, the company moved its North American headquarters in August 2016 from New Jersey to downtown Nashville, adding system upgrades and more staff to key areas. Denlein recognized with a tone of regret the challenges that some dealers may have experienced during the transition period.
Increased investments in marketing and sports marketing as well as a commitment to social responsibility were emphasized as part of Hankook’s brand strategy. Increased views of NBA and MLB messaging along with positive publicity from the opening of the Hankook Technodome and support of the Disabled American Veterans (DAV) combined to measurably grow awareness of the Hankook brand. Share of voice (a measure of marketing activity within a market segment) grew from 2.6% in 2012 to 8.9% in 2016.
Denlein also shared limited details of the upcoming release of the Kinergy PT (H737) new premium touring all-season tire. The tire will be available in 14- to 18-inch sizes across 30 SKUs. It is designed to replace the 727 and will be available in early Q3 of this year.
The business meeting ended with Ed Hochuli, long-time NFL official #85 and attorney, giving an entertaining keynote on the importance of attitude and personal responsibility in your professional growth and that of your organization.