Yokohama Tire Corporation Commercial Division Year in Review and Preview of 2012

FULLERTON, CA - Rick Phillips, Yokohama director of commercial sales, assumed leadership of the division in January of this year. In this Q&A, he discusses the current state of the business, as well as provides an outlook for the year 2012.

With the earthquake/tsunami, product shortages and cost increases in raw materials, how did Yokohama's Commercial Division fare in the industry? 

Rick Phillips: Demand has continued to outweigh supply so we have literally sold everything that we are able to build. At the same time though, it has been very frustrating to not be able to meet the expectations of our customer base. The tsunami just presented another set of issues that we had to manage through. We actually recovered quite well and the impact was less than what it could have been given the severity of the situation. 

How did Yokohama address some of these industry problems

Phillips: The costs have been a huge factor. Although raw materials have fluctuated of late, they have increased dramatically over the last two years. These include transportation, insurance, labor, and related expenses.  We have had to bear these costs but also pass some of them along, unfortunately.   However, if you consider the past couple of years in aggregate, we still have not recouped the full impact of all the rising costs.

Do you see some of these issues carrying over to 2012 for the industry? Which ones and how much of an effect will they have? 

Phillips: As an industry, we will go into 2012 with very little beginning inventory much like we did in 2011. This alone will be a challenge but add to it a demand that's forecasted to remain at high levels - especially within the OEM segment - and  further pressure can only be expected on the replacement market.  Although costs are probably not going to rise at the rates seen by tire manufacturers this year, they are likely to continue to escalate.

Any new opportunities for commercial tires in 2012? 

Phillips: Yes, we see the demand continuing to be greater than supply, at least through next summer.  Despite reports on the economy being on the brink of another recession, the trucking industry remains strong.  Commercial equipment sales and future orders remain high as does the demand for freight.  It's also interesting to note that amid all the bad economic news,  we  actually have had eight consecutive quarters of GDP growth.  Not every quarter witnessed robust growth, but growth was achieved nonetheless.

What is Yokohama's outlook for 2012? Are there any new products in the pipeline?

Phillips: We are expecting a solid year, with new products lined up for launch. There will be a new steer tire, the RY647, which  will be built on a highly retreadable casing, be extremely fuel-efficient and exceptionally resistant to irregular wear.  It's scheduled to be released in 2012. We will also be releasing the 709ZL drive tire.  This will be a shallow and ultra-fuel-efficient drive tire and the latest addition to our Zenvironment line-up. The 709ZL aims to be the most fuel-efficient drive tire in the industry, and, of course, will carry our best-in-industry casing warranty. 

How about the production of the tires themselves? Is there talk about building a new commercial tire plant in the U.S.? 

Phillips: We are actively looking at a number of options all over the globe to expand production and yes, that would include the possibility of building a facility in the U.S.  We will continue to conduct research and will make a decision based on what is the most appropriate strategically for Yokohama on a global scale.