Inside Hankook

Translated into English, “Hankook” means “Korea.” And as the nation’s largest tire maker, Hankook Tire has mirrored South Korea’s remarkable expansion from colonial occupation to Asian economic tiger in a single human lifetime. Korea and “Korea Tire” are on a roll and aren’t afraid to challenge Western manufacturers, including tire makers, on a global scale as replacement products and as OE fitments. How fast is Hankook rising? Between 2001 and 2007, the firm rose from eleventh to seventh in rank among global tire makers, with double digit growth figures. Hankook continues to add capacity across their global operations. The firm operates two plants in South Korea, two in China, (with a third under construction) one in Hungary and is preparing a new plant in Bekasi, Indonesia. Those plants generate a worldwide tire output of 100 million tires by 2014 and Hankook’s 2010 sales were $US4.7 billion.

SSGM was granted a rare opportunity to tour Hankook’s Korean R&D facility as well as the firm’s massive Geumsan plant. Two hours drive south of the capital Seoul, the Geumsan plant reveals how and why Hankook is rising so quickly. With over nine million square feet of space with a production capacity of 22 million units, the huge installation is actually second to Hankook’s Daejeon plant in capacity.

At Geumsan, where SSGM photography on the floor was strictly prohibited, the most striking impression is that of extreme automation. Raw materials are palletized and delivered plant-wide by driverless robotic vehicles. The shop floor is spotless and the air is clean and fresh. A quick peek at a tire building station showed state-of-the-art automated spiral ply buildup with the operator doing little more than monitor the process. Control charts were visible on electronic displays, with processes well within control limits. “Green” (uncured) tires are racked to the ceiling and are also handled with automation, with a surprising mix of tire sizes and types moving through the curing presses. The Geumsan plant can profitably produce small runs of product on an order-fill basis. Warehousing of finished product was minimal, and was also automated with a massive overhead gantry probe that plucks and sorts stacked tire sets like pickles in a jar. Tires are 100 per cent inspected by machine vision systems and by human eyeballs, one of the few cases where tires are touched by hand.

Much of the production machinery is Korean made, but Hankook also uses Western equipment where it’s best suited for high-efficiency. Put simply, the Geumsan plant is as advanced as any, anywhere in the world. Although the hard-core tech inside Hankook tire production facilities is a secret, little things tell a story. Factory workers are relaxed and confident. Bulletin boards display worker wellness programs. An in-house newsletter shows an employee’s trophy from a fishing trip. Productivity is high, but the factory is not a sweatshop.

Hankook’s local R&D facility is equally secretive. It’s large, at over 200,000 square feet with a staff of 600, although it’s possible to spot modern MTS tire testing equipment in test cells that would be familiar to any of the Big Three global players. Advanced laboratories include one dedicated to effluent treatment and air quality, explaining why the smell of hot rubber is more noticeable on the test tracks built in the shadow of the Geumsan plant than on the shop floor. Hankook does not isolate R&D. The firm has technical centres across the globe, including one in the spiritual heart of America’s rubber industry, Akron, Ohio. Access to skilled researchers in the giant US market is the commonly quoted reason for the Akron facility, but it’s also conceivable that building in Goodyear’s home town makes a statement about the firm’s long range aspirations.

Hankook’s medium term goal is to rise to #5 among global tire makers, which would put the company at the level of venerable European makers Pirelli and Continental. The ingredients are all there: global production capacity, including China, a broadening OE fitment base, plus a global brand that’s based in the hottest Asian Tiger economy outside of China. It’s easy to see why Hankook and South Korea are successful by taking a stroll through Seoul or South Korea’s second city, Daejeon. Road traffic is busy and advanced subway systems cover the cities like a net, with more construction every year. The population works long hours by Western standards and uses the latest in smartphone technology, frequently texting, talking and shopping on-line during the daily commute, inside subways. South Korea has the highest penetration of high-speed Internet service to the household in the world. Koreans are loyal to locally-made products, but also enjoy luxury European retail stores. Young people frequently speak excellent English and are highly educated by Western standards. They’re also physically larger than their parent’s generation, essentially equal in height to Western youth and perceive themselves to be part of a global youth culture, while retaining a distinctly Korean worldview.

With Hyundai scoring an unprecedented win at the recent North American International Auto Show, the growing influence of Korean popular culture throughout Asia and enviable economic performance, South Korea, in a word, has arrived. As Korea’s largest tire maker, Hankook’s stated goal is number five, but Korea is rooted in Confucian ideals with a five-thousand-year history. Playing their cards “close to the vest” comes naturally. Don’t be surprised if Hankook is really aiming somewhat higher than number five.