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Published on September 3, 2007

GPX invests $20 million in China factory

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Date Published September 3, 2007

GPX International Tire Corp. has invested about $20 million so far to improve and upgrade the tire plant it bought in Hebei, China, a year ago.

Included in that investment was the installation of solid tire capacity to go with the plant's existing bias-ply tire capacity and to support GPX's solid tire plants in Mississauga, Ontario, and Gorham, Maine, according to CEO Robert Sherkin. GPX eventually may add radial capacity at the Hebei factory, he said.

The facility, which has been renamed Hebei Starbright Co. Ltd., produces bias tires for truck, small specialty, agriculture and specialty off-the-road applications. The factory employs more than 1,000 and has an annual capacity of 40,000 metric tons-about the same as when GPX bought it. ``Most of the work in the last year was to improve what they make rather than increase capacity,'' Sherkin said.

``The initial work in the past year was investing in retooling the facility and improving the processes. It was an older, state-owned enterprise,'' he said. ``There was a lot of work to improve the quality of production and the way the operation works.''

The Hebei factory built tires for GPX for five years before the acquisition. ``We felt they did such a good job with the limited resources and limited tools,'' Sherkin said, noting that the company believed it could make the operation better with additional engineering resources.

``We grew our business from contracting production at other factories,'' Sherkin said. He said GPX didn't have complete control over the production under that arrangement. ``To raise the bar, it was necessary to have a facility that we owned and controlled completely,'' he said.

GPX supplies industrial/specialty tires around the world and anticipates the China plant will help bolster its sales in China and Southeast Asia.

The China plant also will support the company's North American tire production. ``Our intention is to continue production over here (North America),'' Sherkin said. ``We will maintain production in North America and maintain production in China. We will use the special features (of each plant) to better serve our customers.''

More commodity items may be supplied by the Hebei plant, he said.

On the publicity surrounding recalls of Chinese imports, Sherkin said, ``There is a lot of focus recently on lower priced-products. We don't sell tires at low prices. We sell high-value, high-quality products.''