A former auto aftermarket executive with a lot of aftermarket sales and management experience with everything from shock absorbers to car batteries, Yokohama's new COO Jeff Barna readily acknowledges he's new to tires but he doesn't see that as a hurdle.
"I’ve spent most of my adult life selling into channels that are synonymous with tires," he says. "As I’ve told several customers, being around the wheel well and reconnecting with installers who have supported products from companies in my past makes me very comfortable. I have sold to many of the same customers, the same kind of independent dealer and large chains alike. The terminology maybe be slightly different and the number of SKUs much larger, but the fundamentals of good products sold by good sales people to good dealers and all making good profit is universal."
Barna joined Yokohama in January, and after six months on the job, offers these observations about the company, the industry, and the North American tire market.
HDT: You’ve been with Yokohama since January. What are some of your main observations regarding the company and its strengths?
Jeff Barna: Yokohama’s a historic company – we’re celebrating our 100-year anniversary, indicative of a tremendous foundation of products and people. You don’t stay in business 100 years without having an adaptive ability to adjust to changing environments and changing times. I’m impressed by that. Yokohama’s an iconic brand that’s built a reputation of trust and reliability over the years.
While its originating roots are clearly embedded in Japanese soil, the brand has played an important role on American automotive culture. We have a tremendous portfolio of blue-chip customers who express their loyalty every day by selling our products to their end customers. I was pleasantly surprised by the depth of these partnerships and the mutual trust built over the years.
As far as strengths go, number one is people and culture. We have people who have been with us for over 25 years and are still contributing to the progress of the company, and we’ve also welcomed new people who are injecting new ideas and energy. It’s a healthy blend of some old and some new.
Next is quality – not just of the company itself, but the quality of our products. From an assortment standpoint, this is key. We’re a broad-liner manufacturer. We have an impressive range of products that hit just about every segment and category. What’s nice is that we rarely have to say no to our customers.
Finally, it’s value. YTC has done a great job in terms of competitively positioning products in the marketplace that help our customers grow their businesses by offering new revenue streams and attracting new end-customers and consumers.
HDT: What are some of your major goals for Yokohama?
Barna: Growth is a primary objective and YTC has asked me to provide leadership in that respect. We want to hit our numbers for growing sales and revenue, and show Japan we can be an even bigger contributor to the company’s global success. Plus, we want to seize the opportunity we have with new products in the consumer LTR (light truck replacement) and UHPT (ultra high performance), commercial UWB (ultra wide base) and OTR (off-the-road) mining segments.
The foundation here is strong, but we have the opportunity to build a company where people never want to leave and create a reputation as a destination employer where we have no choice but to turn away people who want to work here. That’s how you employ the best and the brightest and, ultimately, that’s the best type of market differentiator a company can have.
My top initiative is meeting our potential. If Yokohama Tire we can meet its potential in the U.S., that will transcend any of the goals that I have in mind for market share capture, profitability, sales growth, etc. If I can walk away from Yokohama knowing that we met our immense potential, I’d be highly satisfied.
HDT: What’s been the reaction from dealers since you came on board?
Barna: To be fair, you should ask them. So far, they’ve been very welcoming…and I am still meeting some of them, listening to their thoughts on the market, their challenges and what they need from us to help them succeed.
We share a commonality. They recognize that while I haven’t been in the tire business too long, I know many of the industry’s players through my experience in the auto parts business. It’s encouraging to hear all the positive things dealers say about Yokohama’s tires and staff.
I’ve moved into new industries before and the initial reaction is that you’re somewhat of an unusual circus act. People are curious and want to know your background, guiding principles and management style. Above all, they want to know what you intend to change. That’s a natural reaction, so it’s important to be patient and as transparent as possible. Having a strong background in sales, I’ve come to realize that one never really gets a second chance at a first impression.
HDT: What industry trends do you see and how has the rise in raw material prices affected your strategy?
Barna: Regardless of trends, people always revert to value. There are trends that are influenced by the economy and new car sales, technology, i.e., selling on the Internet, female buyers, Millennials, etc. However, the one transcendent answer is to provide value. This means not only visualizing trends but translating them into solutions for customers.
The one trend that stands out most is the effect technology and the Internet will have on buyer behaviors in the future. Since we’ve elected to not compete with our customers by selling direct to consumers, we need to better partner in ways that help them thrive as the market shifts. Co-developing strategies to elevate their presence on the Internet and then supporting them with dynamic supply chain capabilities will be imperative.
In regards to raw materials, it’s been about five years since this industry has experienced a measurable uptick in raw material costs, so I’d say that everyone is reasonably inexperienced on how to handle this. I find it exciting, but believe the manufacturing community has done a poor job in articulating the impacts. Everyone has some work to do here.
HDT: What challenges do you see facing the U.S. tire industry?
Barna: The three primary challenges I see are how the industry’s going about right-sizing capacity, how we’re managing supply chain and overall spending. Starting with right-sizing of capacity, it’s a dynamic manufacturing landscape. There are huge investments in brick-and-mortar manufacturing on U.S. soil. During the next three to five years, we’re going to learn a lot about supply and demand, and forecasting to a relatively mature market with new in-region manufacturing. Announcements come every week on multi-hundred million dollar commitments and it’s very exciting, but there’s a lot of unknown.
In respect to supply chain, I’ve been blown away by some of the worst fill-rates I’ve ever seen in any industry. I think it’s embarrassing and admit that as a result we are not achieving our potential in some segments. This is an industry that has the capability to be a lot better in order to serve our customers and their needs in the future, especially as they aspire to better manage working capital in respect to deployed inventory. There’s a tremendous amount of work to be done here.
Finally, I’m not convinced that a company needs to spend $200 million a year in TV advertising to achieve growth in this market. I’m concerned there really isn’t any evidence to substantiate the level of spending you see today. It would be great to see my company on TV every night, but a lot of what I see resembles a keeping up with the Jones’ mentality. I’d rather redirect our spending on grassroots marketing approaches that drive dealer loyalty and pull-through. We intend to calibrate very closely to where our customers ask us to invest to help them create traffic in their service bays.
HDT: What’s the latest news on your new R&D Center in North Carolina?
Barna: The Charlotte facility is an important strategic investment that’s up and running, but in temporary quarters. From a people standpoint, we are building our competency with a solid foundation of proven, experienced Yokohama engineers, while simultaneously attracting brilliant, local talent. No announcements yet on a permanent home or products. When developments occur that will translate into winning solutions for our customers, we’ll share them.
HDT: How has Yokohama Tire Manufacturing Mississippi (YTMM) been progressing?
Barna: Like the new R&D Center, YTMM represents the ultimate vote of confidence for YTC in the future. I’ve been to the plant recently and was blown away by the state-of-the-art machinery and attention to detail. The plant itself is a marvel of science.
As a result, our customers are being treated to what we believe is one of, if not the highest, quality manufactured tires in the market. YTMM is exclusively focused on TBS (tubeless bead seal) tires for the time being. We are ramping up our demand capacity in the U.S., so there’s still a good bit of toggling between offshore sourcing from other Yokohama plants versus the current output of YTMM.
In situations like ramping up production of a new plant, there’s always the temptation to rush the process, which is never a good idea. At YTC, we prefer to get it right as the benefits of longer-term outweigh being hasty. I like how deliberate we are being and know that customer satisfaction and confidence are the ultimate goals. That’s our focus.