Kumho puts US plant on hold for one year

By Sigmund J. Mikolajczyk, Tire Business staff

Punta Cana, Dominican Republic -- As executive after executive of Kumho Tire USA Inc. stood before dealers to pledge that "2009 would be a year of hope," there was one blip on the supply-side radar screen that cast a shadow on their guarded optimism.

Plans for the tyre maker´s factory in Macon, Georgia, have been pushed back about a year due, in large part, to the continuing struggling global economy.

Dealers attending the company´s annual meeting, held at a Dominican Republic resort, were told construction of the factory has been delayed for one year as company officials "sit back and re-evaluate how to best use that facility."

Jim Milhaupt, national vice president of sales for Kumho Tire USA, reiterated that the tyre maker "has no plans to scrap it. It´s just a matter of time when we want to make that plant a reality."

Production from the facility, which was estimated to be 3.15 million units annually, was destined primarily for OE, with eventual plans, Mr. Milhaupt said, to expand it to supply the replacement market. However, with the US auto industry in a tailspin, all bets are off. An OE fitment Kumho was planning on, for instance--a project with Ford Motor Co. on its Fusion crossover vehicle, has been halted. That affected the decision about whether to go forward with construction of the Georgia factory, he added.

Meanwhile, dealers heard from Kumho executives that, echoing last year´s presidential campaign, "2009 has fast become the year of hope." Mr. Milhaupt said the company´s theme--"Having Opportunities and Possibilities Everywhere"--would carry over into its business with dealers.

"We will behave differently than in 2008," he vowed. "We will be looking at...what are the things that we can do that will grow your and our businesses. Will we be able to do everything? Probably not.

"I look forward to re-establishing the relationships you've had with Kumho in the past. Our goal is to grow our business substantially over the coming year with your help."

To accomplish that, the Rancho Cucamonga, California-based unit of South Korea´s Kumho Tire Co. Ltd. has taken a hard look at creating the right team, and has been conducting an evaluation of its management, customer service and inventory groups. The latter group recently hired three full-time employees to track Kumho product on a daily basis to help improve fill rates and lead times for the company´s dealer/wholesaler network.

The company has instituted a daily analysis of product flow for each of its warehouses and is sharing that information with its sales force. It also has moved from a minimum order requirement of 6000 pounds to 2000 pounds, with the goal of having product shipped within 24 hours.

Kumho also outlined plans for its revamped Fuel associate dealer program and its Edge training program, opening the latter up now to associate dealers.

Rick Brennan, Kumho´s vice president of marketing, has been in the tyre industry 37 years, but admitted to dealers: "During 2008 the world changed more for us than in any year since I've been in this industry."

He urged dealers to study and look for trends in popular tyre sizes so they will be able to be on the cusp of changing consumer preferences, including moving away from SUVs and light trucks and toward smaller vehicles such as the popular Toyota Camry and Honda Accord.

"The crossover vehicle movement is going to increase in speed," he predicted.

"All these changes create opportunities. Are you ready to take advantages of these changes?" he asked dealers. "We´re changing a lot of things internally...to have the right inventory in place and get it to you quicker, not in 12 days."

From Tire Business (A Crain publication)