Falken Tyres Europe is owned by Sumitomo Rubber Industries, the sixth largest manufacturer in terms of global tyre ranking, with facilities across Asia including four plants in Japan and further factories in Thailand, Indonesia and China. The Falken brand was created in 1983 and was first sold in the US and Europe some years later. Falken Tyres managing director, Isamu Ishida, talked to Simon Warburton from the company headquarters near Frankfurt in Germany about tough market conditions but also the ringing endorsement from securing Volkswagen‘s recent Up contract.
In 1985, Isamu Ishida joined Ohtsu Rubber in Japan and in 1989 he came to Germany to work as a technical service engineer in Ohtsu’s European liaison office, taking care of aftermarket customers. In 1996, Ishida moved to the sales side of the business. In 2003 Sumitomo Rubber Industries took over Ohtsu and Ishida became general manager of SRI’s European operations. In 2008, he became managing director, leading to the creation of Falken Tyre Europe with sales starting in 2010.
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j-a: How is Falken adjusting to the current economic difficulties sweeping Europe?
II: “Our sales [for] 2010 were a record high [but] for 2012, the market situation [has] completely changed. However, the past six months are up.
“This year, the market has been extremely challenging but they still have success in the first six months. Despite the challenging market, they [Falken] are still holding their own.
“I have been in Europe since 1989, however, I never experienced [such] a difficult market as this year. Also, no [hard] winter and a clear summer, so most customers have high stock of winter tyres.
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By GlobalData“In Germany, the figures show the market down by 41% – we have never seen such bad figures during the last 25 years. There is no way to improve sales volume in southern Europe. My concern is my business for the coming season, for next year.
“The Euro problem, especially Spain, Italy, Greece, Portugal and Ireland, this affects us. However, Falken Tyres Europe is quite new and we see a lot of [possibility] to find new accounts, such as new tyre dealers, distributors and OEMs.”
j-a: Your competitors are also faced with the same economic challenges, what is their response to the difficulties in Europe?
II: “Major brands such as Bridgestone, Goodyear and Michelin are reacting on price, but I don’t want to change the price on a day-by-day basis. I want to wait until the last minute.”
J-a: Are there more hopeful signs you can detect?
II: “On a positive point, we launched a new profile tyre in the high performance segment, so I can use this new profile [to] accelerate business in Europe.
j-a: Do you organise distribution yourself or through another party?
II: “Falken in the past [was] distributing through Goodyear [from] 2003 to the end of 2009. However, Sumitomo established a company in Europe so today, we are selling Falken Tyres ourselves, so have a lot of opportunity to enhance our position.”
j-a: How do external factors such as fluctuations in raw materials pricing affect Falken?
II: “Raw material prices are getting better compared to 2010 and 2011. However, our constraints are not on raw materials, but also exchange rates and the economic situation.”
j-a: Last year’s Japanese earthquake affected many suppliers – what was the impact on Falken Tyres?
II: “Unfortunately, one of the factories was located close to Fukishima, so we stopped production for 20 days. Now that factory, which produces mostly Falken brand tyres, is operating normally.
“We have four factories in Japan and three overseas [sites] in Thailand, China and Indonesia as of today.”
j-a: Falken recently secured a major coup with the contract win for Volkswagen’s Up – what kudos does that bring to your brand?
II: “We have already started supplying Volkswagen factories [for] the Up model, so now we are trying to expand other models and also other producers.
“We [also] engaged [a] sales manager dedicated for OEM business. OEM business is getting more and more important for my company – we are interested in German OEMS because Germany is [the] most important market for us. If our performance is approved by German car industries, it is a kind of proof [of quality].
“Volkswagen is giving us a vote of confidence and is very happy with our performance. The first telephone conversation we made [with Volkswagen] was in the middle of 2010 and we are supplying today, so it is a short development time.”
j-a: Do you retain some optimism for the future, despite the market challenges in Europe?
II: “I have big confidence and the reason for my confidence in Europe [is], Falken is the most important brand for the Sumitomo organisation – so I can get support from my mother company which is the sixth [largest] tyre company in the world. [We are] improving our quality and also [have] racing activities such as the [Nurburgring] 24 hour race.
Last month, Falken tyres said it would supply OEM factory fit tyres to Volkswagen’s Up city car, with the German automaker becoming the first European automobile manufacturer to commit to Falken’s products and specify the Japanese tyre producer as an OEM supplier.
The Up will be fitted with Falken’s Sincera SN831A 165/70R14 81T product and the deal follows a number of Japanese OEMs using Sumitomo Rubber Industries’ brand of tyre.
As well as the SN831A variant for the Up, Falken also produces the FK453 high-performance tyre for use on Porsche and BMW models for example, as well as the FK453CC which can be used for BMW X5, Audi Q5/Q7 and M-Class Mercedes. It also makes the ZE914 standard tyre that can be used on vehicles such as the Golf, Ford Focus and Mondeo. Falken will also have its Wild Peak tyre available in the next six months for off-highway driving vehicles such as the Toyota Landcruiser and Defender.
Falken also participated in the recent Nurburgring endurance event with its own race tyres.
