Thank you very much Bob for your kind introduction.
I’ve visited Akron for many different reasons in the past so I am quite familiar with this place. But standing here in front of all of you is a new and particularly thrilling experience.
Right now, it’s Chusok in Korea, which is what you would call Thanksgiving in America. Families gather around and pay their respects to their ancestors, and enjoy a great feast. The only difference is that we don’t have a delicious turkey on the table.
Now, let me start by thanking the Tire Society for inviting me to be the keynote speaker for the 29th annual conference. Many tire company CEOs have spoken here, highlighting the importance of technology in our business.
So, it is an honor to be here this morning to address the future of the tire industry. I am truly privileged to discuss ways to improve and adapt technology for a changing market with fellow members of the Tire Society. Our continuous effort and ideas will have a dynamic impact on people all over the world.
When I joined Hankook Tire in 1973, its annual manufacturing capacity was only 670,000 tires. In the early 1970s, the Korean tire market was very small. In fact, there were only about 200,000 cars in service.
Many companies, when they find limits in expanding their business, use solutions such as diversifying their core interests and investments. However, our principle was to provide the best quality and service and stay focused on the tire industry. For this reason, we had no choice but to expand our business outside of Korea, which is why early in my career I was assigned to Kuwait to explore for new customers.
The biggest obstacle I encountered in those days as we were attempting to enter the markets of the Middle East was the fact that Hankook Tire was an unknown brand. We had to persuade customers to use Hankook tires on a trial basis but we were always confident of the quality of our tires. As our “quality products and quality services” policy began to take effect, we came to build a strong customer base in the Middle East that remains extremely solid to this day.
Quality and performance
The biggest lesson from this early experience was – and in fact still is – that quality and performance speak louder than anything else. Inspired by those early experiences and lessons, we focused on further improving and expanding our technology investment by opening the first Research and Development center in Korea. Today we have five R&D centers around the world, including our facilities just south of Akron that opened in 1992.
These facilities employ highly trained and skilled scientists, chemists, and engineers … of many nationalities … developing tires that meet the specific needs of local markets while integrating technologies into a global strategy. Hankook Tire is committed to delivering the highest quality tires in the industry, through the focus on technology and sound investment.
Meeting those needs takes not only research and development, but teamwork. The teamwork between our employees, our “Hankook Tire Family”, is one of our richest resources. By actively cultivating a positive workplace atmosphere, Hankook Tire continues to be an organization that views employee relations as crucial to our success. From our R&D centers, to our factories and Regional Headquarters, it is this teamwork that has allowed us to focus on the needs of consumers and react to the changing demands of the worldwide market.
As now the world’s seventh largest tire company, our projected production this year is 80 million tires from five manufacturing facilities – a capacity that represents a 120-fold increase over a 37 year period. Our ability to grow has been driven by our continuous investment in research and development.
Performance and quality are the ultimate demonstration of technical competence. Hankook continues to invest approximately 5 percent of its total revenue annually in research and development to ensure that the highest standards of product quality and environmental responsibility are met.
For Hankook Tire this investment strategy has produced breakthroughs in tire technology in the areas of tire design, construction, compounding, and manufacturing processes.
Our success in the global marketplace is evidenced by our earning of original equipment fitment contracts, growing third party endorsements for our replacement tires, participation in global motorsports, and of course the growing number of loyal customers around the world.
The various tire market segments such as the original equipment, replacement, motorsport, and commercial truck segments drive technology in different ways. Coupled with our global business strategy and the “regional” demands of our customers, we must not only maximize the synergy of common technologies but also recognize that each market and each product has unique technologies that stand on their own.
Our continuous technology investments have led us to become the leading supplier to the Korean original equipment market. However, our main goal is to be a leading global company. In 1996, our first global non-Korean Original Equipment breakthrough came with Ford Motor Company in the United States with the qualification of Hankook Tire’s mini-spare.
Further success came with Hankook Tire’s qualification for the 2004 model year Ford F-Series pickups. At present, we’ve strategically expanded our original equipment business with Ford, General Motors, Chrysler, Volkswagen and Audi, as well as many commercial truck and bus manufacturers. Such stunning successes would not have been possible without our investment in the Akron Technical Center in 1992 and continued investments in global R&D.
Our long term relationships with car and truck manufacturers serve us in two ways: It helps build awareness for and confidence in the Hankook Tire brand. Second, it challenges our engineers, compounders, and scientists to continuously advance our capabilities to keep up with the needs and demands of the original equipment market segment.
The replacement market is very different … sometimes requiring different technology objectives and performance goals, which are driven by broader consumer preferences, government regulations and standards, and magazine competitive testing both here in the U.S. and Europe.
Quality always comes first
However, ultimately it doesn’t matter if our discussion is on original equipment or replacement products. For Hankook, quality always comes first: Quality that enhances performance and exceeds customer expectations.
When it comes to the issue of performance quality, in addition to the essentials of durability, handling, and mileage, we must give further consideration to the importance of noise, comfort and lower rolling resistance. And we must do this with an even greater focus on the environment.
Throughout my 37 year career at Hankook, I have been a participant in a fantastic journey as I literally witnessed a small company grow to be one of the major tire manufacturers in the world. There have been many big decisions along the way, and certainly many big investments that have paid off.
But no decision has been more important or critical than the early commitment to research and development that has led to the production of tires that drive our long term growth objectives. Sales and marketing efforts can influence people to try your tires, but quality and performance keep them coming back.
Hankook Tire has enjoyed unprecedented growth as the direct result of our focus on quality products that provide great performance and the foundation of our success was built by our R&D team. I am sure that this is true of all the manufacturers represented here.
As global manufacturers, we must also be held accountable for helping to protect our environment. We cannot be so absorbed in pursuing sales growth that we become blind to the vulnerability of our planet.
What can we as an industry do?
Let me suggest a few actions.
- We must develop new raw materials that aid sustainability.
- We must reduce energy consumption in manufacturing and distribution.
- We must reduce our carbon footprint.
- Our focus on quality and safety need not be at the expense of environmental responsibility.
I’d now like to move onto the recent changes in technology and the challenges that lay ahead.
The world is experiencing unprecedented change, and the tire industry is no exception.
In the past few years the tire and rubber industry has seen advancements in compounding, materials science, product development and manufacturing. Most change has been evolutionary, not revolutionary. We must and can challenge ourselves to do more.
We’ve seen an increase in the use of silica-containing treads and new compounds designed to reduce rolling resistance while maintaining traction and tread wear. While fuel economy technologies were once only the focus for Original Equipment tires, they are now important for the replacement and commercial truck tire markets as well.
We must continue to reduce rolling resistance without a trade-off in performance. Original equipment manufacturers are pushing for further advancements in rolling resistance reduction and consumers are increasingly demanding more fuel efficient tires. Despite the enormous advances our industry has made in this area, improvements in compounding technology have not kept pace with the relentless demands of the market.
That said, I am proud to acknowledge that we as an industry have risen to the challenge and found ways to make reinforcement materials lighter but stronger. Further, our industry has developed new tread designs and constructions that help reduce rolling resistance while improving traction and tread wear.
The environmental impact of a tire reaches beyond fuel economy. Our industry has answered the call for more environmentally friendly tires with new materials that reduce or eliminate the use of petroleum based materials, and reduce CO2 emissions. Within Hankook Tire we have pledged green growth for the next generation as we fulfill our corporate social responsibilities. We call this campaign “H-LOHAS”, Hankook Tire’s Lifestyle of Health and Sustainability.
As I’m sure many of your companies have done, Hankook Tire has completed the global implementation of non-aromatic (low PAH) oils in all of our tires as part of our social and environmental responsibility drive. As global manufacturers we must work cooperatively to develop the tires of tomorrow – tires that reduce CO2 footprint.
Carbon footprint reduction involves not only reducing emissions through rolling resistance reduction but reducing emissions that occur during the manufacturing process. Our efforts in this area have included upgrading to more energy efficient equipment in manufacturing.
Consumers and commercial end users take for granted the scientific marvels that are the tires they ride on today. Is that a bad thing? No, not at all. It is the benefit afforded to all of us for living in a competitive global society. But progress is made through technology – technology that needs to be innovated and developed by those in this conference.
Consumers and commercial end users will continue to demand more, and good healthy competition will continue to raise the bar. Success lies in finding the next big technology breakthrough faster than your competitor. Technical advancements in the tire development process through improved analytical simulation and hardware testing capabilities and processes are essential as they will lead to faster and improved product development techniques - techniques that can increase the speed at which products are brought to market by months.
So what lies ahead?
We need to continue our efforts in reducing rolling resistance, and making tires even more fuel efficient. Auto manufacturers are specifying this. Replacement consumers are demanding this. And many governments are in fact regulating this.
For example, U.S. corporate average fuel economy (CAFE) standards require a dramatic 40% increase in fuel efficiency for new domestic vehicles, including SUVs and small trucks, by 2020.
NHTSA has pressed for rules mandating that manufacturers test tires for rolling resistance, in addition to tire wear and traction, and add this information to new tire labels to help consumers differentiate between tires. Labeling tire performance is also required in Europe. And this is only the beginning. Electric and hybrid vehicles will continue to increase in market share, vehicle weight will continue to drop and new government regulations will be implemented. In addition, tire noise levels must be reduced to address the problems of noise pollution.
In summary, we must all take on the challenge of finding new and better ways to address the environmental issues associated with the manufacturing, distribution and use of tires.
We must accept this challenge without compromising the fundamental objectives of quality in improving performance and safety. And perhaps most importantly, we must accept this challenge for the benefit of our families and future generations.
And to this end recyclability and sustainability must be evaluated and considered as future products are developed.
Fundamentally I’m a “sales and marketing” guy. So for me the technology challenge is simple. Designing tires that will last longer, perform better and can be produced for less. I’m sure you’re thinking: easier said than done, right?
New construction and compounding technologies must evolve to make an even better balanced tire. We must explore how to make tires lighter without sacrificing durability.
It is up to all of us to work together; the researchers, scientists, and engineers, to push the limits of technology beyond what us sales and marketing guys can imagine. Today’s technology can only meet the challenges of today.
Often quality is measured in terms of customer satisfaction and performance. But as we press ourselves for faster and more innovative design and development, we must ensure that the “quality of R&D” is never compromised.
Proper care and maintenance
In addition to developing more advanced, fuel efficient tires, I believe that tire manufacturers share a crucial responsibility in educating consumers about proper care and maintenance of their tires. For example, as we all know, low air pressure degrades performance, endangers vehicle occupants, and harms the environment.
In June, the RMA released survey results showing that millions of drivers in the United States alone are putting themselves at risk and wasting gas by failing to properly inflate their tires. The survey reported that only one in six vehicles had properly inflated tires and 55 percent of all vehicles had at least one under-inflated tire.
Therefore, I would like to propose that all tire manufacturers jointly develop a global campaign for educating consumers about air pressure and the overwhelming benefits that we can all enjoy if we simply maintain proper inflation.
Now as I bring my presentation to you this morning to a close, let us all be reminded that we must keep exploring and challenging ourselves to embrace change and innovation.
As Sir Winston Churchill said, challenge "only adds to the joy and glory of the climb."
Advancing technology is an ever-extending, ever-ascending, and ever-changing journey.
- It is the quest to make good even better
- To make safe even safer
- To turn dreams into reality
This journey, our journey will never end. In fact, our climb will only become steeper.
Advancing technology requires a fuel of passionate drive. I hope that you will continue to enjoy your climb…your technology journey … and that you have passion in all that you do. I hope that you will apply that passion today and tomorrow and take back something with you from this conference, as I definitely will.
Thank you once again for inviting me to spend this time with you this morning.