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Digital Edition
Digital Edition
Published on September 9, 2002

Tire makers' expansion plans exceed $1 billion

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Date Published September 9, 2002
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Tire makers globally committed more than $1.6 billion in the past 12 months to specific capacity expansions and plant modernizations, a dramatic jump from the few hundred million dollars budgeted last year but on par with the amount budgeted the year before.

The expansion projects monitored in the past year by Rubber & Plastics News account for more than 96,000 units of new daily capacity. Plant closings throughout 2001 and early 2002, however, took as much as 95,000 units of daily capacity out of circulation.

Among the major producers, actual capital expenditures during the year fell more than 9 percent, with only Sumitomo Rubber Industries Ltd. and Pirelli S.p.A. increasing their spending over 2000. Groupe Michelin topped the capital spending list, both in raw spending at $974.9 million and as a percentage of sales at 6.9 percent.

On average, the major producers devoted 5.5 percent of sales to capital spending, down from 5.9 percent a year ago.

Spending on research and development, on the other hand, was up at seven of the 10 major manufacturers for which data were available, but the declines-at Goodyear, Cooper Tire & Rubber Co. and Hankook Tire Co. Ltd.-were enough to keep the average spending among the majors at 3.3 percent of sales.

Michelin and Continental A.G. led the industry last year, devoting 4.4 and 4.1 percent, respectively, of sales to R&D.

Expansions

Bridgestone Corp.

Bridgestone will invest more than $250 million in the coming two years to expand global capacity. The spending includes:

* Japan-$40 million to add 5,000 units of daily capacity for higher value-added tires at its Kurume, Tosu, Hofu, Hikone, Tokyo and Nasu plants by year-end;

* Thailand-$80 million to increase capacity at the Nong Khae facility by 55.5 percent to 28,000 units per day by year-end 2004;

* Indonesia-$8 million to raise capacity at the Karawang factory by 20 percent to 18,000 units per day;

* China-$8 million to increase daily capacity at Bridgestone (Tianjin) Tire Co. Ltd. 27.2 percent to 14,000 units;

* Poland-$60 million to raise the daily capacity of its Poznan plant by 50 percent, to 15,000 units by year-end 2004;

* Costa Rica-$40 million to more than double capacity of its San Jose factory to 13,500 tires a day by year-end 2004;

* Mexico-$8 million to raise capacity of its Cuernavaca facility 7.7 percent to 14,000 tires a day by year-end; and

* Canada-$22.5 million at Bridgestone/Firestone Canada Inc.'s Joliette, Quebec, plant for new equipment to expand the range of tire sizes and types it produces for cars, light trucks and sport-utility vehicles.

Fate S.a.i.c.i.

Argentina's Fate has started construction of a factory for radial truck tires. No investment data or construction timetable was made public. Continental is Fate's technology supply partner.

Goodyear

Goodyear has committed nearly $500 million to three major projects, along with a smaller project at a joint venture:

* U.S.-$250 million over four to five years to modernize its Lawton/Fort Sill, Okla., radial passenger tire facility;

* U.S.-$120 million to modernize its Topeka, Kan., farm and earthmover/ OTR tire plant that will upgrade equipment, processing and technology during the next five years;

* China-$120 million through 2006 to nearly triple production capacity for passenger tires at its Dalian facility. Capacity will rise to 5.3 million units by 2006, when employment will double to 1,000; and

* New Zealand-Goodyear's South Pacific Tyres Ltd. joint venture will invest about $5 million at its Upper Hutt passenger car tire plant this year to expand output nearly two-thirds to 2.4 million tires annually.

Hankook Tire Co. Ltd.

Hankook will invest $250 million in its two Chinese factories, in Jiaxing and Jiangsu, by 2010, tripling annual production capacity to about 20 million units in a bid to boost sales in China to $580 million. The first-phase of the investment project will inject $100 million by 2004 when Chinese sales should reach $300 million. The second phase would occur in 2004-2010, helping to push sales to $580 million, according to Hankook President Choong Hwan Cho.

Kerman Tire & Rubber Co.

Iran's Kerman Tire has budgeted $70 million to build and equip a radial truck tire plant, under supervision of Continental, the technology supply and off-take production partner.

Nizhnekamskshina

Russian's Nizhnekamskshina has budgeted $60 million to increase radial car tire capacity at its Nizhnekamsk factory in Tatarstan by 2 million units annually. Pirelli will provide know-how and equipment for the project and supervise production start-up, train personnel and provide continuous technical assistance to Nizhnekamskshina, the company said.

Pirelli S.p.A.

The Italian tire maker plans to spend $136.6 million to add radial capacity to Pirelli Pneus S.A.'s 25-year-old Feira de Santana, Brazil, plant. The facility, acquired by Pirelli in 1986 from Pneus Tropical, has a nameplate capacity of 1,200 units a day of bias-ply car, light truck and medium truck tires.

Sumitomo Rubber Industries Ltd.

* China-Budgeted $62 million to set up a tire plant, in partnership with Taiwan's Hwa Fong Rubber Ind. Co. Ltd., in Jiangsu, China, with daily capacity of 5,000 units and 350 workers. Production is scheduled to start in April 2004; and

* Indonesia-Sumitomo's second tire facility in Indonesia raises output in that country by 30 percent to 2,350 metric tons of rubber consumption per month. By the end of the 2005, capacity is expected to rise an additional 28 percent, to 3,000 tons a month, Sumitomo said.

Groupe Michelin

* U.S.-Michelin North America Inc. will spend about $56 million to upgrade equipment at its Ardmore, Okla., tire plant and up to $200 million to expand its Lexington County, S.C., earthmover tire factory. This new investment follows an $18.2 million investment in 2001 and a $21.5 million project in 2000; and

* Mexico-Michelin invested about $3 million to reopen a passenger and light truck tire factory in Queretaro that it had closed two years earlier. The former Uniroyal S.A. de C.V. facility now operates under the auspices of a new company, Autopartes Internacionales de Queretaro, with daily output of 6,000 units at full capacity.

Yokohama Rubber Co. Ltd.

Yokohama took over majority ownership of its Hangzhou Yokohama Tire Co. Ltd. joint venture in Hangzhou, China, and broke ground on a radial tire facility at the site. It has budgeted $60 million for the factory, which should begin radial passenger car tire production by May 2003, with initial annual capacity of 750,000 units.

Acquisitions/joint ventures

Continental A.G.

Conti is buying a 30-percent stake in Malaysia's Sime Darby Bhd.'s tire activities-DMIB Sdn. Bhd. and Sime Tyres International Sdn. Bhd.-which are being brought together under a common unit to be known as Merit Manufacturing Sdn. Bhd.

A combined DMIB-Sime Tyres entity would report sales of more than $200 million annually. Conti began supplying DMIB and Sime Tyres with technical assistance in January, following the termination of a 17-year-old technology agreement Sime Darby had with Sumitomo.

Nokian Tyres P.L.C.

Nokian and Amtel Holdings Co. of Russia are producing up to 200,000 snow tires for the Russian market this year at an as-yet-undisclosed Russian factory. The deal will be expanded gradually to cover other tires as well, and is seen as a ``first and important step'' for Nokian's objective to establish tire manufacturing in Russia.

Closings

Bridgestone

Bridgestone/Firestone closed its Decatur, Ill., tire plant Dec. 14, ending 38 years of production at the site. At peak capacity, the factory made 30,000 tires a day, but output had dwindled to less than half that in the wake of the Firestone Wilderness recall.

South Pacific Tyres Ltd.

South Pacific Tyres, the Ansell Ltd.-Goodyear joint venture, closed its Footscray, Australia, commercial and farm tire plant and the Thomastown, Australia, passenger tire facility. Capacity from Thomastown was consolidated at its 40-year-old Somerton, Australia, factory.

Continental

Conti phased out tire production at its Semperit car and truck tire plant in Traiskirchen, Austria, and closed tire factories in Herstal, Belgium; Gislaved, Sweden; and Guadalajara, Mexico. In addition, Moroccan tire maker General Tyre Morocco-34.2-percent owned by Continental-closed at the end of 2001 after filing for insolvency after a restructuring plan failed to produce a turnaround for the money-losing operation.

Michelin

Michelin closed its truck tire plant at Burnley, England, and phased out tire and steel cord production at its Stoke-on-Trent, England, site. In Germany, Michelin closed its St. Ingbert semi-finished products factory.