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A Look Inside China’s Triangle Tire

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Although six of the world’s top 20 largest tire manufacturers are located in China or Taiwan, and despite the fact that all of these have global ambitions, for the most part these companies are still developing their positions in international markets.

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Likewise, while reams have been written about the top names and more recently there has been increased coverage of the activities of the South Korean bloc (Hankook, Kumho and Nexen), far less detail is reported about the leading Chinese players. It has to be said that this is partly because of the media’s gravitation towards well-known names but is also because – and this is something of a generalization – Chinese manufacturers don’t have the best reputation when it comes to international communications.

The last year or two has seen a number of the leading Chinese tire manufacturers open their doors to Tyres & Accessories, revealing fascinating insights into their production processes and strategies. Triangle Tire was no different when the company’s senior vice president and director of international trade management center, Lin Xiaobin warmly welcomed T&A to visit its headquarters at the end of 2011.

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The visit, which was organized in conjunction with U.K. importer TYM international, was the first time the media had been invited to tour Triangle’s existing production plants, logistics operation and brand new factory in Weihei, Shandong Province.

“What’s the national bird of China? …The crane,” Art Villasol (Triangle’s director of customer engineering) quipped en route to the factory tour. A joke it may be, but the speed at which companies such as Triangle are able to construct greenfield tire production plants is simply astounding. While here in the U.K. planning permission can take months, Triangle took not much longer than a year to construct its latest factory complete with blocks of flats for factory workers. In fact despite only breaking ground in 2009, this site has already started production and is set to reach full capacity in another two years.

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The words “full capacity” also have to be taken seriously. Annual production capacity at the completion of the new Weihai plant is set to reach 20 million units of UHP tires, 5 million units of truck/bus radials, and 750 thousand tons of rubber mixing.

Altogether this is expected to generate 10 billion yuan (roughly $1.5 billion) in sales annually.

Currently the company runs three tire plants – Production Base Number One, which manufactures 5 million passenger car and light truck tires, 3.5 million truck/bus radials and 3.5 million bias tires each year; Production Base Number Two (200,000 radial OTR, 10,000 giant OTR, 100,000 bias OTR and 12 million passenger car tires annually); and the company’s rubber production center, Production Base Number Three.

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Number Three produces 10 million rubber flaps and inner tubes, 5000 tons of rubber powder and 500,000 retreads a year. In December 2011, Triangle’s retreading operation, which at this point was running at 200,000 units a year, was recognized as one of Shandong Province’s top 10 “Circular Economy Demonstration Projects” by Shandong provincial government. According to the company, since 2004, Triangle Group has regarded “circular economy” – or sustainable business – as a key part in its business development.

Triangle reports that it built the first tire retreading production line in the Chinese tire industry using international advanced retreading technology. In 2009, Triangle established and implemented the Low-Carbon Economy, a green manufacturing model to actively develop green products and circular economy, and to ensure company’s sustainable development.

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Established as Weihai Factory in 1976, the company became Shandong Tire Factory some 11 years later. Twenty-five years later the business became Shandong Triangle Tire Co. Ltd.

The company embarked on passenger car and light truck tire production in 1990 and produced its first truck and bus tires in 1995. Triangle became the first “Chinese Famous Brand” recognized from within the tire industry in 2000.

Producing the first 23.5R25 radial OTR tire in China in 2002 proved to be a very significant breakthrough, with this segment going on to become a key part of the company’s business, leading to high-profile OE arrangements with world-renowned construction vehicle makers such as Caterpillar since 2004.

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Triangle added 17.5R25 and 20.5R25 sizes in 2003. By 2004 the company was producing 80,000 OTR units a year. Output grew 25% between then and 2005, growing to 100,000 OTR tires a year. In 2006 production totaled 120,000 units and the size range added 14.00R25, 26.5R26 and 29.5R25 sizes to the line up.

2007 saw the range grow to include 33- and 35-inch diameter sizes, with output now reaching 150,000 units. 2008 saw production capacity reach 200,000 OTR tire units, before 49-, 51- and 57-inch sizes were added to the line-up in 2009. When Caterpillar started the SQEP (Supplier Quality Excellence Program) in 2007 in order to select, evaluate and certify partners, Triangle won the bronze award, followed by silver and gold trophies in 2008 and 2009, respectively.

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In addition to Cat, Triangle has “strategic partnerships” with what some might describe as surprisingly high profile global companies. These include the Chinese wings of Nissan, Suzuki and Volkswagen, as well as ongoing OE and business relationships with the likes of Volvo, Hyundai and Iveco.

OE is particularly strong in the OTR sector, as the company’s ongoing supply of Cat suggests, with Sandvik, Terex, Liebherr and Case New Holland all amongst the vehicle-makers receiving tyres from Triangle. In addition to these well-known international names, the company supplies passenger car and truck and bus tires to a host of Chinese vehicle manufacturers and even the Chinese military.

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In parallel with the swelling production range and the seemingly ever-increasingly manufacturing output, Triangle’s group sales figures have also been gaining altitude. Despite the relatively humble beginnings that saw the company report turnover of less than 1 billion yuan (around $150 million) in 1993, by 2010 sales had skyrocketed to around 17 billion yuan (roughly $2.5 billion).

The New Weihai Factory
Production Base Number Four is amongst the biggest greenfield sites that Tyres & Accessories has visited in the last few years. When T&A was there in November, roughly half of the two parallel production halls were completely construction with the second main building well on its way.

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The site features a covered area of 430 acres, plus ancillary buildings, residential housing and plenty more space around the site that has not yet been built on. After noticing the sheer scale of the site, the next thing that is apparent is that the enormous roof is plastered with dozens and dozens of solar panels offering photovalic power in addition to the conventional wired supply. According to company officials this will reduce energy consumer by 3% in the first instance.

In addition, the company has built the site with a zero discharge of water philosophy in mind. The green-think continues with lower carbon manufacturing plans and can even be seen in the latest generation of products which are both SmartWay accredited and reportedly offer a 15% improvement in wet grip.

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During the T&A visit, machinery installation was still continuing, so it is difficult to say how the inside will operate when production goes live in the opening months of 2012. However, if Production Base Number Two is anything to go by (which the magazine did tour), the factory will feature the blend of western manufacturing equipment such as Troester extruders and Fischer cutters, along with top-end local machinery (such as Mesnac’s automated weighing and measuring system) that has become a feature of the leading Chinese tiremakers.

Something else that is noticeable about the Triangle approach is that every time the bar is raised in terms of production quality, the company has been able to meet the standard. First it was DOT, followed by E-mark, S-mark, clean-oil Reach requirements and most recently the apparently well-progressed plans for tire labeling compliance in the second half of 2012. The company’s products also carry the CCC approval mark for the local Chinese market, while the company’s manufacturing operations are ISO9001, ISO14001, QS9000 and ISOTS16949 certified.

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At the same time the company worked through a series of productivity and efficiency improvements based on internationally recognized Six Sigma principles. These efforts began in 2006 with the appointment of 13 so-called “black belt” Six Sigma master practitioners working on 42 projects for the next year. By 2008 this figure had grown by 15 black belts, then working on 64 projects until the point that it had grown to 34 black belts working on 60 projects in 2010.

As well as impressive automated warehousing onsite at the company’s various production plants, Triangle also distributes its tires through an impressive third part logistics operation close-by the new production plant – Weihai International Logistics Park. Built between 2008 and 2009 with initial investment of 100 million yuan, the park is 300 minutes from air, rail and road links – including proximity to the planned high-speed rail links. The latter potentially reduces freight time to Qingdao seaport from 5-6 hours by road to just one hour by rail.

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Although the park is very clearly a third party operation, the largest customer is Triangle followed by Sinopec, which stores large quantities of synthetic rubber on the site, much of which is ultimately destined for Triangle’s consumption. In addition well-known fried chicken brand KFC meets some of its logistics needs, but it is clear that there are real benefits to Triangle’s business in particular from having a professional 3PL virtually on its doorstep.

Triangle’s warehousing at the logistics park contained space for some 300,000 truck tires and another 500,000 passenger car tires. These are stored in very modern racking systems, which – stacked 8 stillages high – are identified by RFID chips. These in turn are identified by a RFID reader and computer on-board forklift trucks, meaning picking and dispatching the right tires while maintaining a last in last out system is as routine as it can be.

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All these developments exemplify the forward -ooking impetus that is increasingly becoming a feature of this established Chinese manufacturer. What it will take for Triangle to achieve its ambitious goals and how much will need to be invested to make this happen are other questions, but if the model set by Triangle Group chairman Ding Yu Hua and senior vice president Lin Xiaobin are anything to go by, the determination to make Triangle’s vision a reality is certainly there. (Tyres & Accessories)

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