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Digital Edition
Digital Edition
Published on August 23, 2004

Tire makers boost expansion projects

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Date Published August 23, 2004
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After a cautious year of investment strategy in 2002-03, the world's major tire makers devoted more of their resources to capital expenditures in the past 12 months than in the prior year.

The major tire companies have disclosed more than $2 billion in investments in the past year for specific expansion/modernization projects, up measurably from the $1.2 billion disclosed in 2002-03 and the $1.6 billion in 2001-02.

Individually, the major companies have budgeted the following:

Groupe Michelin, nearly $450 million; Continental A.G., more than $389 million in new projects; Bridgestone Corp., $196 million; Toyo Tire & Rubber Co. Ltd., $150 million; Kumho Tire Co. Inc., $130 million; Pirelli S.p.A., $115 million; Cooper Tire & Rubber Co., more than $45 million; Yokohama Rubber Co. Ltd., $76 million; and Nokian Tyres P.L.C., $63.5 million.

On a corporate basis, the 11 tire makers with more then $1 billion in annual sales plowed 5.4 percent of their sales in 2003 back into capital expenditures. The overall level of spending was up nearly 23 percent over 2002 and put the industry's giants back on par with 2001.

Of the 11 major tire makers, only Goodyear, Pirelli and Toyo reported lower capital spending last year.

Kumho reported the heaviest capital expenditure rate at 10.4 percent of sales, ahead of Sumitomo Rubber Industries Ltd. at 7 percent, Bridgestone at 6.8 percent and Michelin at 6.6 percent.

On average, the majors spent 3.3 percent of their corporate revenues in research and development activities, according to data from nine of the 11. The ratio was down slightly from the 3.4 percent reported for fiscal 2002.

Of those that reported R&D spending, Hankook Tire Co. Ltd. and Michelin reinvested the most, at 5 and 4.6 percent of their sales, respectively.

Among specific projects announced are:

Amtel Holdings

* $75 million for a radial car tire plant in Voronezh, Russia, adjacent to an existing 54-year-old factory there. Capacity will be 3 million tires annually when completed.

Bridgestone

* $45 million to expand annual capacity about 11.5 percent at its Bridgestone Metalpha USA steel cord facility in Clarksville, Tenn., to 58,000 metric tons by early 2006. The expansion will require 125,000 square feet of new space at the 690,000-sq.-ft. plant and will create 35 jobs.

* $106 million to expand production of radial off-the-road tires at its Hofu, Japan, factory to 16,000 metric tons by year-end 2007.

* $45 million to build a state-of-the-art tire proving grounds in Aprilia, Italy. Phase I, which comprises a 21/2-mile high-speed oval circuit, a 22.2-acre ``black lake'' wet handling area, a 21/2-mile dry handling circuit and 11 noise and comfort tracks, was inaugurated earlier this year. Phase II will take until spring 2006 to complete.

Continental

* $183 million to build a car tire plant in Camacari/Bahia, Brazil, with production to start in 2006.

* $122 million starting in 2006 to add capacity at the Camacari facility for commercial vehicle tires by 2008. Together the projects will create more than 1,000 jobs.

* An undisclosed sum to modernize and expand capacity at newly acquired factories in Selangor and Alor Setah, Malaysia. Combined, projects in Brazil and Malaysia will add 7 million units of annual passenger/light truck tire capacity and 700,000 units of annual truck tire capacity by 2006.

* An undisclosed sum to expand annual car and light truck tire capacity at its San Luis Potosi, Mexico, plant to 27,000 units a day.

* $84 million for a new facility in Otrokovice, Czech Republic, for high-performance radial passenger tires. The new factory, to be built adjacent to the existing Barum Continental S.R.O. car, truck and farm tire plant, will be rated at 3 million tires a year, with 430 manufacturing-related employees.

Cooper Tire

* $11 million at a retread materials facility in Athens, Ga., to add capacity for racing tires. No capacity was given. The project should create about 30 jobs when it comes on stream in early 2005.

* $7.5 million to boost capacity for larger-diameter performance tires by more than 500,000 units annually at its Tupelo, Miss., passenger tire plant. Initially, capacity for 17- and 18-inch radials will be added, but eventually the factory will have capacity for sizes up to 22 inches in diameter. The investment will create 35 jobs at the 1,500-employee plant.

* $19.4 million at its Albany, Ga., facility to boost capacity for radial car and light truck tires by 1.39 million units. The expansion will create 56 jobs. The new capacity fills space made available by the company's decision to shift production of medium truck radials to China.

* $5.2 million to boost capacity at its Texarkana, Ark., plant by 560,000 units annually and expand the operation's capability to manufacture ultra-high-performance tires.

* $1.8 million to boost capacity for passenger and light truck tires at its Findlay, Ohio, factory by 500,000 units, or 5.5 percent, annually. The expansion will create at least 30 jobs.

* An as-yet undisclosed sum to build a facility in China for radial passenger and light truck tires in partnership with Taiwan's Kenda Rubber Industrial Co. Ltd. The joint venture plant, to be built in China's Jiangsu Province, near Shanghai, should be operational by early to mid-2006.

Dunlop Tires Int.

* An undisclosed sum being invested at its Durban, South Africa, factory to expand steel radial truck tire capacity.

Dunlop Nigeria

* $18 million to add steel radial capacity to its Ndolo, Nigeria, bias-ply truck tire plant.

Firestone East Africa

* This Bridgestone affiliate has budgeted $1.5 million to upgrade and expand truck and bus tire capacity at its Nairobi, Kenya, facility.

Goodyear

* $15 million to expand truck tire production capacity at its TC Debica S.A. subsidiary plant in Debica, Poland, by an undisclosed amount.

Hankook Tire

* Undisclosed sum to phase out bias-ply tire capacity at its Geumsan, South Korea, facility and add 2,300 units of daily capacity for radial high-performance tires. New capacity is being brought on stream throughout 2004.

Hwa Fong Rubber

* $10 million for a motorcycle, scooter, bicycle and all-terrain vehicle tire factory near Bangkok, Thailand. The new plant should be operational before the end of 2004 with an annual capacity of 12 million tires-6 million industrial tires and tubes, 3 million motorcycle tires and tubes and 3 million bicycle tires and tubes.

Kumho

* $130 million for a radial passenger tire facility in Nanjing, China, adjacent to an exiting truck and bus tire plant there. The factory will have an annual capacity of 5 million units by 2008.

Michelin

* $26.5 million upgrade of its truck and bus tire plant in Ballymena, Northern Ireland, principally to add new technology at the facility and enhance efficiency. No capacity or employment increase data were disclosed.

* $19 million upgrade of its 21-year-old Bridgewater, Nova Scotia, passenger and light truck tire factory to enhance flexibility and expand capacity for larger dimension light truck tires. The plant employs 1,100.

* $12 million to enhance capacity for large industrial and construction tires at the 22-year-old Waterville plant.

* $74 million to boost radial truck tire output 40 percent at its 23-year-old Campo Grande, Brazil, factory to 1.6 million units a year.

* $24 million to expand steel cord capacity at its Itatiaia, Brazil, facility. Together the two Brazilian projects will create 500 jobs over two years.

* $59 million to add capacity for radial passenger tires at its Taurus Rubber Co. Ltd. agricultural tire plant in Nyiregyhaza, Hungary. The factory will be capable of 2,500 tires a day by June 2005. The project will create 200 to 300 jobs.

* $28 million to buy a 14.9-percent stake in India's Apollo Tyres Ltd.

* $70 million, together with its partner Apollo Tyres, for a new radial truck and bus tire plant in Ranjangaon/Maharashtra, India. The facility should come on stream in 2005 but not reach full annual capacity of 300,000 to 350,000 tires before 2007.

* $100 million in the coming five to 10 years for as-yet undisclosed projects in China.

* $11 million to build a steel cord factory in Zalau, Romania. The project should be operational by mid- to late 2004.

Nokian Tyres

* $63.5 million for a passenger tire plant in Vsevolozhsk, Russia, which will have a startup annual capacity of 1.5 million passenger tires by 2006. The 226,000-sq.-ft. facility will be expanded gradually to 4 million tires annually. Employment initially will be about 200.

* Several million dollars for new molds and other equipment to expand capacity at its Nokia, Finland, factory to 6 million car tires annually. The project is part of $82 million in capital investments budgeted for 2004.

Pirelli

* $115 million in unspecified projects to modernize and expand truck tire capacity globally, including adapting aspects of the firm's Modular Integrated Robotic System for tire production to truck tires. Pirelli makes truck tires in Europe, South America and the Middle East.

Sibur Group

* Up to $300 million over four years to modernize and expand tire plants in Omsk, Yekaterinburg, Volzhsk, and Yaroslavl, Russia. No further details available.

Toyo Tire

* $150 million for a passenger and light truck tire factory in Bartow County, Ga., capable of 2 million units a year initially.

Yokohama

* $26 million to double annual capacity for radial passenger tires at its Hangzhou Yokohama Tire Co. Ltd. joint venture in Hangzhou, China, to 1.4 million units by year-end. The project will more than double the plant's size to 1.43 million square feet; employment will rise to 500 from 300 upon startup of the new phase.

* $50 million through April 2005 to build a steel radial truck and bus tire facility near Bangkok, Thailand. The plant will have an initial annual capacity of 315,000 units, but this will be doubled by 2007 in a second-phase project, for which no investment projection has been released.

* * *

Plant openings

Bridgestone Corp.: Radial truck/bus tire factory in Thailand and a radial passenger and light truck tire facility in China

Kumho Tire Co. Inc.: Automated radial passenger tire plant in South Korea

Groupe Michelin: Radial passenger tire factory in Davydovo, Russia

Nankang Rubber Tire Corp.: Passenger tire facility in China

Pirelli S.p.A.: Radial passenger and light truck tire plant in Brazil

Plant closings

Carlisle Tire & Wheel Co.: Trailer, implement and industrial tire unit in Trinidad

Continental A.G.: Ceasing tire production in Mayfield, Ky., by the end of the year

Goodyear Dunlop Tires North America: Passenger and light truck tire plant in Huntsville, Ala.

Goodyear/Gran Industria de Neumaticos Centroamericana: Light and medium truck and agricultural tire unit in Guatemala