Horizon Tire: Chinese Factories Coming to U.S. - Tire Review

Chinese Tire Factories Coming to U.S., Says Major Distributor

[Editor’s Note: Among its many tire brands, Houston-based Horizon Tire Corp. represents a number of Chinese tire brands in the U.S. market, including Crosswind, produced by Shandong Linglong Tyre Co. This puts Horizon Tire close to the action when it comes to the impacts felt by the recent posting of countervailing and anti-dumping duties on consumer tires imported from China. Horizon Tire vice president of marketing Dale Guerrieri talked with Tire Review about Shandong Linglong Tyre, Chinese tire companies, and how he sees the added duties affecting the market.]

How has your relationship with Shandong Linglong Tire evolved over the past five years? Where do you see the relationship in five years time?

“There has been a very viable and productive relationship between Horizon Tire and Linglong over the last five years. And presently that is the case. I see Linglong Tire recognizing the value of this relationship to continue over the next five years. It is expected that there will be some changes and adjustments in the tire industry –  company to company, internal relationships – in the future. For Horizon Tire, I see those changes and adjustments proving to be very positive for both companies.”

What is Horizon Tire’s sales pitch for Shandong Linglong tires?

“Horizon Tire does not make a sales pitch for Linglong Tires in itself. We present product made by Linglong – the Crosswind brand – that integrates with U.S. market needs. For Horizon Tire, this includes ‘values’ presented to the dealer base and market, including U.S.-based warehouse inventory, a ‘feet on the ground’ industry veteran servicing sales staff, a very capable customer service base servicing our clients, and other positive features important to our customer base. Also, we will be introducing mileage warranties covering the bulk of our Crosswind brand passenger, ultra-high performance, light truck/SUV and CUV tread designs.”

At the end-user level, who is the typical Linglong consumer tire buyer? What about at the medium truck tire level?

“Our customer base consists of retailers, distributors and wholesalers that need and want to present tire products that fill consumer demand as it relates to value for price. As far as our Linglong/Crosswind medium truck radials, we have significant penetration into the U.S. market at key levels of representation to include retreaders needing a casing warranty and SmartWay-verified product.”

When it comes to your dealer customers, what does Horizon Tire add to the mix to support Shandong Linglong Tire?

“We represent a very large portion of their factories’ production.”

What other tire brands does Horizon Tire represent? How do you see that mix evolving over the next five years?

“We are the exclusive distributor of the Crosswind brand in the U.S. – excluding Southern Florida and Puerto Rico. Also, Linglong brand passenger, winter, trailer and light truck products are in our offering. And, we market some selected Linglong and Crosswind medium truck tires. In addition, we have other Chinese brands available to us such as Antares and Rydanz, and some other brands, as well. In evolving over the next five years, our corporate tagline is ‘Vision For The Future.’”

Horizon Tire currently has four DCs in the U.S. How many do you expect to have by 2020, and what geographic territories are you keying on for future DCs?

“Currently, we have four company-owned DCs. In addition, we have three additional outsourced parcels in use. Also, we are currently looking at the near future purchase of an additional 500,000-square-foot facility. As far as 2020, that’s a ways away. I wish I could give you a number.”

How much input does Horizon Tire have with Shandong Linglong Tire, and how do you think that may change now that the company is opening a formal office near Akron?

“We consider ourselves to be business partners with Linglong. Their office in the Akron area is the ‘seed planting’ of R&D capability, future OE position initiatives, and representation of their own controlled brands such as Leao and GreenMax, which is an OE level tire.”

Do you see a point where Shandong Linglong Tire opens a production facility in the U.S.? What about a complete sales, marketing, management and customer support headquarters in the U.S.?

“Linglong has stated that they are in the process of opening a factory in the Americas, which can include mainland U.S., Mexico and Brazil. Linglong is a growing and evolving world-sourcing company. Just as Kumho, Hankook, Giti and others have plotted recently, I would expect that at some point that could happen. In the meantime, Horizon Tire is focused in the present the same as Linglong.”

Now that the countervailing and anti-dumping duties have been set – at least preliminarily – what is Shandong Linglong Tyre’s view of the U.S. consumer tire landscape?

“In some ways, I would think that Linglong looks at this situation as ‘happy trouble’ in that they do have a very viable and resourceful factory facility in Thailand. It is predicted by many that this is a very short-term problem for Chinese manufactures. And, the manufacturing side of things will fall back into prospective. The U.S. consumer is the loser via the countervailing and anti-dumping duties.”

What Chinese tiremakers do you think will leave the U.S. market, and which will remain?

“Some have already left. Although, it may prove to be temporary. As far as to which is leaving and remaining, I am not in a position to speculate.”

How important to Chinese tiremakers is success in the U.S. tire market? How has that view changed now with the new duties in place?

“A lot of factors come into play here. The U.S. market comprises over one-third of the world tire market. That means that they still have approximately two-thirds to function in if they chose not to market in the U.S. Again, I see the duties as impacting them in the short-term. I do know for a fact that the Chinese manufacturers are not too discouraged in the face of the new duties. At some point more clarity will come to this issue via the media, economists, politicians and consumer pushback, resulting in a new direction and/or rectification.”

Going forward, do you feel these additional duties will force certain Chinese tiremakers to build plants in North America? What will it take for Chinese tire brands to compete and succeed in the U.S. market?

“Chinese tiremaker factories are coming to the U.S. for certain. The course has already been plotted. We will see Chinese brand tire products evolving into U.S. auto factory OE business the same as we have recently seen with South Korean brand product. Don’t be too surprised when we see Chinese brand vehicles made in the U.S. at some point soon after they start being imported to the U.S. Do you think that GM or Goodyear would stand for being told that they can no longer operate in China because of politics? This total evolution is a two-way street, part of an evolving world market.”

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