First Job after Workout
Kumho Tires (CEO Kim Chang-kyu) obtained approval from its creditors to resume the construction process of its manufacturing plant in Macon, Georgia. The company is planning to invest US$413 million in the facilities to create an annual production capacity of four million tires and complete the process in early 2016.
The products produced there will be supplied as original equipment (OE) tires. Once the plant is built, Kumho Tires’ overseas manufacturing capacity surpasses its domestic production capacity. The construction process began in 2008, but was halted due to the global economic crisis.
At present, the global annual tire demand is estimated at around 1.6 billion units and the North American market accounts for approximately 20 percent of it. In addition, the North American market is a particularly important high-end one, and the construction of a manufacturing base there can facilitate partnership with automakers and the supply of OE tires. A number of global leading carmakers are found in the southern region of the United States, and thus it can lead to stable supply and repurchases in the replacement tire market. According to the Rubber Manufacturers Association (RMA), the North American tire market is expected to record a compound annual growth rate of 5 percent between 2013 and 2018 thanks to the U.S. economic recovery and an increase in the demand for OE tires.
The plant of Kumho Tires is slated to be located just 296 km and 177 km away from the Alabama and Georgia plants of Hyundai Motor Company and Kia Motors, respectively. Kumho Tires is currently supplying more tires to the North American plants of Hyundai and Kia than the other two Korean tire manufacturers do.
Non-Korean tire companies are continuing their investment and setting up manufacturing bases in the market as well to better meet demand. At the same time, they are working on production base diversification in order to save manufacturing and transport costs and respond promptly to fast-changing regional trade conditions. Facility capacity and size are regarded as two of the most fundamental factors determining the competitiveness in the industry.
Kumho Tires entered the U.S. market in 1975 and has continued expanding its sales networks for higher sales in the replacement tire market, while sponsoring sports teams for increased brand awareness. For example, it has supported the LA Lakers and Miama Heat since 2010, and the NBA League and the New York Jets football team more recently.