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Hagan: Linglong Americas is Truly Building for the Future

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HaganJohn Hagan’s varied 26-year tire industry career is instructive of how he got to his current post as COO of Linglong Americas Inc., and driving the Chinese tiremaker’s North American ambitions.

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Hagan started as a credit manager for Pirelli in 1989, moving to financial analyst and customer service manager. In 1994 he took his first field sales post as Northeast territory manager, and in 1998 he was named North America OE sales manager. By 2005, Hagan was vice president of OE for Pirelli Tire North America, and in 2008 he left tires for a couple of executive posts. Just one-year later Hagan was back, first as senior director of sales for Toyo Tire USA Corp. in 2009, and then national sales vice president for Kumho Tire USA Inc. in late 2013.

In March of this year, Hagan moved east to Medina, Ohio, to literally start from scratch as COO for the newly formed Linglong Americas, a wholly owned subsidiary of Shandong Linglong Tire Co. The company is housed in a small office building, and Hagan has been looking for new digs even as he builds out an entire sales, marketing and support staff – and the necessary infrastructure to conduct business.

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Linglong’s path in North America has been equally varied, with multiple distributors handling its various brands – both consumer and medium truck tires – in various ways. At last year’s SEMA Show/Global Tire Expo, Linglong president and CEO Wang Feng spoke directly to U.S. dealers, announcing the formation of Linglong Americas and setting it up just outside of the former Rubber Capital of the World.

The event also showcased Linglong’s new consumer tire plant in Thailand, a strategic move that has helped the tiremaker dodge the latest antidumping and countervailing duties put on China-made consumer tires exported to the U.S. Wang has committed 95% of that plant’s capacity to servicing the North American market.

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Tire Review recently sat down with Hagan to discuss Linglong Americas’ plans going forward, and how he is structuring a team that can take the brand to the next level in a highly competitive market.

TR: What is “Linglong Americas”? What is it being constructed to do territorially? Is it just the U.S., or is it all of North America?

Hagan: It’s pretty much all of North America, including Canada and Mexico. Our concentration right now is on the U.S., getting the structure up and running in order to support the local customers. You know, a lot of Linglong’s business has been container business. We are now supporting it with warehousing, and soon we will have marketing programs and the like. We have field staff out there now, and we’re growing.

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The way I’m doing it is top down, so I hired two vice presidents, one of commercial truck, one of replacement consumer tire; a regional sales manager and then a product planning/marketing person. And then the next steps are to really get into the regional sales managers positions.

TR: When do you see the organization – as you envision it – being pretty much complete?

Hagan: Probably 2016. Our goal is to grow the business, and grow the staff to support the business. We had a good thing happen to us recently when we picked up TBC. That was wholly unexpected. My ultimate goal was to grow distribution and then go after a major distributor. It’s sort of flip-flopped around.

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Opportunity knocked on our door, and we opened the door. It worked out. It’s still in the beginning stages; we’re two months into shipping them direct, which has been good for us. So far it’s been a really good partnership.

TR: Is that commercial and consumer or just consumer?

Hagan: Right now it’s just consumer. Hopefully, we’ll have commercial, too.

TR: Brand-wise, what are they picking up?

Hagan: Crosswind. Hopefully in later months, when we’re ready, the Atlas brand. Atlas is our premium brand, and we’re repositioning it with the customers.

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TR: With the warehouse program, how many warehouses are there and where are located?

Hagan: We have two, one each in Kentucky and California.

TR: Where do you see Linglong’s best opportunities over the next two years, and then long-term, like five years out?

Hagan: The short term, I see Linglong really developing into a multi-branch strategy. We have several brands to work with, and we’re creating a strategy so that all of the brands complement each other, versus where they are today, where anyone can buy whatever brand. This is more of a creating a brand strategy with the Crosswind, the Leao and the Linglong brands and then later on with the Atlas brand. The longer-term strategy is really creating a high-end distribution footprint.

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TR: What do you envision that being?

Hagan: More of a balance between wholesale and retail…depending on where you put the Internet companies. My cynical opinion is everybody’s an Internet company in one shape or form. So moving forward, it is about trying to get a balance of wholesale and retail.

TR: Crosswind, Leao, Atlas and Linglong, talk about each of those brands and where they are right now and how they’re being deployed, and then how you see that shifting going forward.

Hagan: Crosswind is the horse, so to speak. Everybody knows Crosswind. Everybody likes the Crosswind product. But when you talk commercial truck tires, you have the Linglong and Leao brands that are very strong commercial brands, too. All the brands hit all the targets in a very thinned-out way. There’s no ‘go to’ Leao product for this strength, or ‘go to’ Atlas for that strength. So long-term, it’s more separating the brands so they have a true identity away from each other. Right now the identities clash with each other.

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TR: Some of that’s obviously going to involve new products.

Hagan: New products, certainly. Mainly, what we’re currently working on is what I call the Atlas 2.0, which is a revamp of the Atlas brand. They are Atlas tires, but more designed for the North American market – passenger, light truck and commercial truck. And brand positioning will become key in this whole thing. When you start talking about the brands, it’s really clearly stating their unique identities, and even in general distribution too.

TR: What is the intent with Atlas right now?

Hagan: Right now Atlas will be our premium brand, our OE brand. Once we feel comfortable, then we’ll start down that path. We’re already in talks with the OE manufacturers, doing benchmarking. I’m not even talking overseas OEMs, because they have some forward fitments and the like, but more pure North American OEMs. We’re in talks with both, and with the Big Three in some form.

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TR: Going forward, with new products and brand realignment and then getting those messages out to dealers and then consumers, what’s the grand plan for that?

Hagan: The grand plan is to work with our dealers…increase our dealer base and work with our dealers to get our brand marketing messages out. And then in parallel, working with social media and taking some marketing initiatives. We recently signed up with a company that produces sports programs, like what you’d get at one of the bowl games. We’ve gotten a very good share in all of those programs. We’ll be in a lot of the college bowl games and the Super Bowl program books to get our brands out.

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Our ultimate goal is to build our distribution in 2015, and then going into 2016, really start working on the market side.

TR: You were just at the Linglong plant in Thailand. Where are they at in terms of product quality and consistency and certainly capacity?

Hagan: The capacity has increased especially, in medium truck tires. We just came back from the 40th year of Linglong and the opening ceremony of the commercial truck lines there. PCR and LTR continue to grow. They have some very good efficiencies going on. I really see the challenges just getting the tires out, due to the ports situation, but other than that, the quality has been good. I’m very impressed with that factory. Out of all the factories I’ve seen, this is truly impressive. It’s a lot of high-end VMI equipment. Wang’s done it right. We’re very proud of the facility.

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The warehouse fire there earlier this year was a set back, and they just started building the replacement warehouse. You really don’t understand the magnitude. I was there just after the fire and saw all the rubble, and your mind just can’t get around how big the warehouse was until you go back and you actually see the framework of the new warehouse. It was big. The structure’s up, and within the next two months they’re supposedly going to have the warehouse up and running.

TR: And Linglong has two plants in China?

Hagan: Three. And they’re looking to expand outside of China and outside of Thailand. Wang, hopefully, will make an announcement at the end of this month, and we’ll see where that goes.

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TR: What’s the odds-on favorite for that one?

Hagan: My personal opinion, I don’t think it’s going to be the U.S. on the first shot. I think there are other needs out there, better locations at the moment.

TR: Is Linglong ambitious?

Hagan: In my opinion, very ambitious. They’ve got a good name out there. They do a lot of private brand work, so a lot of people know them and they know what their capabilities are. It’s really just getting word out to various customers. And the people they’ve hired, quite honestly, all have experience with all these customers, so it makes the relationship work very well for customers.

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TR: Does that ambition include possible acquisitions?

Hagan: That I don’t know, quite honestly. I think his whole game plan is to elevate the brand. My clear instructions, at least in North America, is to make it a Tier Two brand, which, based on what I see going on, I think it’s very possible. We can do it.

TR: What obstacles that you face right now?

Hagan: The obstacles are the speed and getting the word out that you can go direct with us. We have brokers, and then we have distribution. The brokers are very important to us, but creating our own distribution locally is just as, if not more, important. What Linglong Americas brings to the table are programs, support and follow-up. With other Chinese Tier Three/Tier Four manufacturers, you put your order in and it gets lost or something happens and the customer is frustrated. We have somebody who follows it all the way through and supports you from soup to nuts.

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TR: From a product standpoint – consumer and commercial truck tire – where do you see holes that need to be filled?

Hagan: Sizes. When you look at some of the brands on the commercial side, in some of our tread patterns it’s very fragmented. We don’t have enough sizes to support the U.S. market. We have most of them, but there’s a lot of push from my side to get more sizes introduced. There is no hesitation on Linglong’s part, it’s just based on the brand, the tread pattern and what kind of sizes do we want to complement each other. Crosswind is a very good size lineup, but we’re not complete with some other brands. They have the top sizes, but they don’t have the good medium- to low-end sizes, where a dealer would want to take a full line on.

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TR: How long do you think it’ll be before that gets sorted out?

Hagan: By the end of this year. Mr. Wang is very proactive in that approach. He’s been great to work with in Linglong Americas. Anything we need will happen, and there’s no doubt in my mind knowing every day that I have his full support. It’s just a matter of getting a lot of the things done. We’re changing the mindset of a company that has been doing it from China. Now we’re going to start doing it from the North American market.

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TR: Now, they opened a tech center here in Akron.

Hagan: Yes, it’s in Medina. Same office as our headquarters. It’s operated by Terry Edwards, who does a great job. He and his team are really the force behind the success that Linglong Americas will have in the way of product lines, specifically with Atlas. They’ve done a lot of independent benchmarking with our products against the Michelins, the Contis of the world. The results in some cases are better than I expected, and in other cases make sense. We’re designing tires for the U.S. market, more all-season products, more light truck products, sizes, that type of thing, but with a concentration on the Atlas brand.

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TR: You aid that the goal is to make Linglong a Tier Two tiremaker. From a product screen standpoint, where do you see Linglong products fitting best for a tire dealer? Is it still going to be more of a price orientation or…

Hagan: It’s going to be both. Right now it’s a price orientation because pricing has been all over the place and there is a sensitivity to the pricing, but some of the things we have coming down the line with the Atlas brand and how we’re going to support the dealer, there’s going to be a multi-brand strategy. So the dealer will still have an opening price point, but they will also have a brand available as a premium. And then if we’re successful, we will help elevate it even more.

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