By LOU WILIN
Gunning for overseas sales to someday match those in North America, Cooper Tire & Rubber Co. is bringing more talent to bear overseas. Chinese and European operations have generated 36 to 40 percent of Cooper Tire’s sales in recent years.
To boost that, Chief Financial Officer Brad Hughes has been named president of international operations. He will continue as financial chief until a successor is named.
Hal Miller, who was president of the International Tire Division, has been named executive adviser to Chief Executive Officer Roy Armes. Among other things, Miller will help the company determine the future of its large joint venture plant, Cooper Chengshan Tire Co. in China.
Cooper Tire’s partnership with Chengshan Group went awry last year when Cooper Chengshan Tire and its unionized workers sabotaged the proposed sale of Cooper Tire to Apollo Tyres of India. The Chinese plant stopped producing Cooper-brand tires and withheld the plant’s financial information from Cooper Tire leaders.
Without the financial information, Cooper Tire could not release information about its performance in the third quarter of 2013. That prevented lenders from releasing financing that Apollo needed to buy Cooper.
Since the Apollo deal unraveled, the Cooper Chengshan plant has resumed production of Cooper tires and is releasing financial results. Cooper and Chenshan Group have agreed that one of the companies will buy the other’s interest in the factory, or they will keep the current structure in which Cooper owns 65 percent.
Whatever Cooper Tire ends up doing, it has much at stake in China, the world’s fastest-growing tire market.
“Cooper’s international segment has grown rapidly, and we plan to continue to drive profitable sales, ultimately positioning our international business to deliver half of Cooper’s total global revenues,” Armes said. “Brad (Hughes) has been highly involved in our global business operations for the past five years, leading teams in Asia and Europe, as well as North America. … Hal (Miller) has done a tremendous job over the past decade growing our international sales to $1.2 billion with solid profitability. He has established a firm foundation and a track record of success, and he will continue to be involved in helping to assure that we maintain our momentum in this important part of our business.”
One way or another, Cooper will keep earning profits in China, Armes has said.
If Cooper sells its interest in Cooper Chengshan Tire, it will gain a war chest of at least $283 million to invest elsewhere, said Keith Moore, managing director and event-driven strategist for MKM Partners, Stamford, Connecticut.
An independent valuation firm may decide Cooper’s interest in the plant is worth even more, and Cooper would receive more.
Cooper would have “added flexibility to enter into acquisitions, new offtake relationships, or possible greenfield development of additional production capacity anywhere around the world to support the expansion of our business,” Armes said.
The Chinese plant will have to keep making Cooper-brand products for at least three years, too, Cooper said.
If Cooper buys Chengshan’s minority interest, worth at least $152 million, “We will have the certainty of a wholly-owned asset with an experienced team in place that will continue our China growth strategy,” Armes said.
Either way, Cooper will keep employing sales, marketing and technology forces in China, and retain its other Chinese factory, Cooper Kunshan Tire Co. outside Shanghai, he said. Cooper is the sole owner of that one.
A target date for overseas revenue to match North America sales was not mentioned by Cooper Tire. But the priority is clear.
“Our vision is for Cooper to become an increasingly global tire company,” Miller told analysts and investors in May.
Cooper Tire in May outlined a China strategy that includes supplying more tires for automakers. Cooper has primarily focused on making replacement tires. But China is a different case, so Cooper must do something different to create brand awareness there.
“Thousands of consumers are buying their first car in China each day. With their relative automotive inexperience, they default by replacing the tires with (original equipment) brands,” Miller told analysts and investors in May. “This is particularly true for the first and second replacement.”
Cooper Tire’s factory in Serbia, bought in 2012, also is prominent in Cooper’s strategy.
It minimizes Cooper Tire’s distribution costs because it is near the large and rapidly growing markets of Eastern Europe and Russia, Miller said. Besides being a lower-wage-paying country, Serbia has duty-free status with the European Union and Russia.
“We’re going to support this entry with a larger sales force and additional resources,” Miller said.
Miller, 62, joined Cooper in 2002 as vice president of corporate planning and control and was named president of the company’s International Tire Division in 2004.
Prior to joining Cooper, he served for 16 years with Eaton Corp. in Toledo, where his most recent position was vice president and general manager for the fluid power hose and plastic operation. Miller’s background also includes 10 years in public accounting as well as mergers and acquisitions experience.
A certified public accountant, Miller earned a master’s degree in business administration from the University of Toledo, and has a bachelor’s degree in business administration from the University of Cincinnati.
Hughes, 52, joined Cooper in 2009 as vice president and chief financial officer. Formerly a 23-year employee of Ford Motor Co. in Dearborn, Michigan, Hughes worked as global product development controller for Ford in Dearborn; as finance director for Ford’s South America operations in Sao Paulo, Brazil; as director of European business strategy and implementation in Cologne, Germany; as European manufacturing controller, also in Cologne; and in other corporate finance and treasury positions.
Prior to joining Ford, Hughes worked for Fruehauf Finance Corp. in Detroit. He earned a bachelor’s degree in business from Miami University, Oxford, Ohio, and earned a master’s degree in business administration from the University of Michigan Business School, Ann Arbor, Michigan.
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