Industry overview with Yokohama Tire’s Hamaya
In this Q&A, Takayuki Hamaya, Yokohama Tire Corporation’s (YTC) executive vice president and chief financial officer and chief operating officer, examines several industry hot topics and gives an overview of 2013.
Question: In your new position, what would be your strategic focus?
Takayuki Hamaya: Getting varied products in the right quantity and at the right time will be a strategic emphasis of mine. This will allow us to be truly responsive to the market while maintaining strong efficiency.
Question: What are some of the ways you see your strategy executed?
Hamaya: Forecasting, certainly, will be a critical component, and forecasting with greater precision than before. Looking at Yokohama’s supply and demand on a global level would be another. This would create unprecedented level of flexibility for YTC as we consider what to produce, where and when.
Yokohama has plants worldwide – in Japan, Thailand and the Philippines for example – that we’ll capitalize on to bring to the market an even stronger flow of products. The Phase I expansion in Yokohama Philippines, in particular, announced in 2011, has started operation in February of this year. It is projected to have an annual production capacity of 3 million tires, most of which will be slated for the U.S. market. Further increases will come online with the factory’s Phase II expansion, announced last month. When completed in 2015, that expansion will enable Yokohama Philippines to add another 2.5 million tires in its production capacity.
We’ll draw production strength from our Salem plant as well. The cost structure is greater than our other plants, but without it, YTC would face higher costs. This is where pricing strategy becomes imperative. When we make key products, whether at our Salem plant or elsewhere, they will simply need to be priced right.
Lastly, Yokohama will heighten the integration between our sales and product planning functions to attack the market powerfully with products that meet the U.S. needs.
Question: Is the U.S. market different because of the huge diversity of products to sell?
Hamaya: The U.S. is unique compared to the Japanese and European markets. Fifty percent of the consumer tires are for trucks and SUVs, which is considerable than in any other country. The U.S. also has many requirements such as tires with all-season capability and long mileage.
The requirements in Europe are different because they drive very fast, especially in Germany. There, they may not care as much about how long a tire would last as they would about the tire’s performance at higher speeds. Overall, in terms of tire performance and technical requirements, producing the right tire for the U.S. market is more difficult than anywhere else.
Question: How does the consumer market look?
Hamaya: It’s a little weak right now. The competitive space is much more crowded and the diversity of the product and price range add to the volatility. This is yet another reason why getting the right product mix is so critical for long-term success.
At the beginning of 2012, the industry – including Yokohama – did well regarding supply and demand, and all were profitable. However, in the second half of the year, demand slowed down. That translated to lower prices and more price-war competition. Everybody’s business suffered. Companies were forced to spend more money to gain market share and that cut into profits.