The Push to the Top Tier - Tire Review Magazine

The Push to the Top Tier

As sunshine washed over the pristine beach of Los Cabos, Mexico, Hankook Tire America Corp. dealers and distributors huddled inside a resort conference center ballroom to hear a business update from the growth-focused Korean tiremaker.

As sunshine washed over the pristine beach of Los Cabos, Mexico, Hankook Tire America Corp. dealers and distributors huddled inside a resort conference center ballroom to hear a business 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 begin producing tires in April 2017. Total capacity at the end of its four phases of start-up will be 22 million units annually. Phase one of production at the new facility will create 1.7 million 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, moving some of its production from facilities in Indonesia to the United States. Currently, the Clarksville 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 grows.

The opening of the Hankook Technodome last year is also part of the plan for marketplace differentiation. The $240 million R&D facility in Daejeon, South Korea, houses 1,100 research professionals and staff. The company also invests 5% of global sales to R&D to fuel innovation. 

The company is also known for its eye-catching futuristic designs. Recent tire designs earned the company the coveted Red Dot award for product design innovation.

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.

Increased investments in brand marketing and sports marketing as well as a commitment to social responsibility were emphasized as part of Hankook’s marketing 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.

Denlein also shared limited details of the upcoming release of the Kinergy PT (H737), a 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, giving an entertaining keynote on the importance of attitude and personal responsibility in your professional growth and that of your organization.

A Conversation with Hankook

Following the business meeting, Tire Review sat down with Hankook leadership for a deeper dive into the company and it’s current activities.

New People and New Facilities
In his welcome remarks at the conference’s opening night dinner, Denlein told dealers that the goal is to make Hankook an easier company to do business with.

When asked to explain further, he said, “We’ve had a lot of growth, and to keep up with the growth you have to build a certain infrastructure, so one of the biggest things is that we have to have people – not just any people but we have to have good people. ” He said the company’s recent move and expansion has resulted in adding more people, many with strong skillsets.

Hee Se Ahn, president and COO of Hankook Tire America, added, “For each different department, we will have more staff so that our dealers can have easier communication with us.”

Because having a strong corporate culture is a priority for the Korean-based tiremaker, introducing so many new people to the organization is being done with proper planning, training and investment in place. 

The new production facility in Clarksville is the first in the U.S. for Hankook, expected to come online in the second quarter of this year. Hankook broke ground on the facility in 2014 and originally slated its opening for last fall. When asked about any delays, Jae Bum Park, senior vice president of Hankook Tire America, said, “It’s not a delay. We have been working to perfect our production. It’s a brand new plant and our very first in the United States, so we have been working on quality, hiring and really training our people at that plant. I think our schedule is on track.”

Facility growth for the organization is not limited to the U.S. Those we spoke with were very proud of the Hankook Technodome, which opened in October 2016. Park explained why the new R&D facility is so important to the organization: “Our Technodome is iconic, a symbol and monument that represents our innovation,” said Park.

Laufenn brand update

The company’s value-segment brand, Laufenn, launched in 2014 and continues to grow.

“[Laufenn remains] retail only, that hasn’t changed,” Denlein said. “In terms of customer base throughout the country, we have core retailers who have been selling it. It’s been very well received.”

Park added that the brand will continue to evolve: “We are going to be adding more sizes to our Laufenn brand, over 19 inches. And we are going to expand the scope covered by the brand in the future so we are going to add more value to our customers.”

Tire trends

In addition to materials cost concerns, Denlein said he watches OE manufacturers to anticipate what’s coming next in the marketplace.

“Just with the amount of effort that we place in OE, we feel that we’re on the cutting edge in terms of the trends in terms of sizing,” said Denlein. “The proliferation of sizing [due to] the OE market is going to make it challenging for our dealers, and we feel that we’re in an advantage with sizing moving forward.”

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