- Hyosung to acquire oversea assets, largest single supply agreement in the industry
- Local production sites in all continents, strengthens its position as No.1 tire cord manufacturer
- Local production sites in all continents, strengthens its position as No.1 tire cord manufacturer
Hyosung Corporation signed a long-term supply agreement worth of 3.2 billion dollars with the Goodyear Tire & Rubber Company on Sept. 6th at Goodyear’s headquarters in Akron, Ohio. Young-Kwan Choun, President of Hyosung’s Tire & Industrial Reinforcements Performance Unit, Hyun Sang Cho, Senior Vice President of Hyosung’s Corporate Strategy Center, Richard J. Kramer, Executive Vice President & CFO of Goodyear were present at this event.
This long-term supply agreement is the single largest supply agreement in the industry. For Hyosung, this is the second long-term supply agreement with a global tire player after Michelin. Hyosung proved its high technology and product quality through this agreement. Through this, Hyosung has been able to secure a solid and promising revenue in the years to come.
Hyosung has decided to take over four Goodyear tire reinforcement plants located in the US, South America, and Europe, initiating operations next year.
These plants located in Decatur (Alabama, USA), Utica (New York, USA), Americana (Brazil), and Colmar-Berg(Luxembourg) are currently producing a wide range of tire reinforcements covering polyester, aramid, rayon, nylon 6, nylon 66, and fiberglass tire cords.
This acquisition will allow Hyosung to possess production sites in South America and Europe adding to the currently existing global production sites in America and China so that it can produce and supply locally manufactured products on every continent.
Moreover, Hyosung will further strengthen its position in the world market as the only fully integrated tire cord manufacturer producing all major tire reinforcements including traditional reinforcements such as polyester tire cords, nylon tire cords, steel cords as well as new and high-tech aramid tire cords and high performance rayon tire cords.
“The acquisition of Goodyear’s assets is the result of Hyosung’s global strategy,” said Hyun Sang Cho, Senior Vice President of Hyosung who has successfully led the negotiations for this deal. “This has great strategic value because it will allow Hyosung to possess production sites in two very important markets: Europe, the biggest high-value-added products market and South America, one of the fastest growing markets, contributing in the construction of a ‘true global network’,” he commented.
“Entrance into the ‘high-tech/high-value-added tire cord market’ such as aramid and rayon is another important earning of this deal. Hyosung will focus on maximizing customer profit through quality and economics rather than acquiring the largest market share,” he added.
Hyosung currently has global sites in Ulsan, Korea, Scottsville Virginia, USA(polyester tirecord), Scottsberg Indiana, USA(steel cord), Jiaxing, China(polyester tirecord), Qingdao, China(steel cord).
Hyosung has maintained multi-year supply contracts with many global tire makers. In 2002, Hyosung signed a long-term agreement with Michellin to supply polyester tire cord worth 350 million dollars for 7 years. Hyosung also signed a ten year supply contract with Michelin in 2005 to provide steel cord worth 650 million dollars.
Tire cord is a reinforcement material placed within the tire to provide better performance, durability, and stability to the tire. Hyosung’s tire reinforcement-related revenue in 2005 was about 700 billion Korean won.
The supply agreement between Hyosung and Goodyear is to be effective only after the closing, which is scheduled for the year-end of 2006.
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Any inquiry regarding to the contents of this article should be directed to Terry Swanner, Vice President, Hyosung Tire & Industrial Reinforcements North America.
