Hankook to build U.S. tire plant to meet increased demand

Hankook Tire Co., South Korea’s biggest tiremaker, plans to build a plant in the U.S. to meet increasing demand.

The company is in talks to locate the factory in Tennessee, South Carolina or Georgia, and the decision should be made as early as next month, Cho Hyun Shick, president of Hankook Tire Worldwide Co., which is in charge of Hankook Tire investment decisions, said. The tiremaker intends to start with a capacity for 5 million units a year before gradually doubling that as it boosts its foothold in developed markets, Cho said.

Hankook, which said it will supply Daimler AG (DAI)’s Mercedes-Benz S-Class models, is also expanding plants in Indonesia and China as it takes on bigger global rivals including Tokyo-based Bridgestone Corp. “By building a plant in the U.S., Hankook Tire is saying that it is now prepared to go head to head with top tiremakers in developed markets as well as emerging markets where it already holds a strong position,” Lee Hyung Sil, an analyst at Shinyoung Securities Co., said. “The fact that Mercedes-Benz awarded the new S-Class contract to Hankook Tire also shows the company’s competitiveness.” Hankook Tire jumped 4.5 percent, its biggest gain since May 14, to close at 60,200 won in Seoul trading. The benchmark Kospi fell 0.1 percent. The company also won a contract to supply Nissan Motor Co. for its new Altima and has expanded orders from Bayerische Motoren Werke AG and Toyota Motor Corp., Suh Seung Hwa, chief executive officer of Hankook Tire said.

Source: Bloomberg