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Published on September 3, 2007

Goodyear Dalian unit in ongoing expansion

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Date Published September 3, 2007

Another capital improvement project already is on the drawing boards for Goodyear Dalian Tire Co. Ltd.'s Dalian plant, where a four-year, $140 million expansion is ongoing.

Production of high performance tires at the 15-year-old factory should hit 17,000 units a day by the end of 2007, a spokesman at the Goodyear subsidiary said. The company is aiming for output to reach 6 million tires next year.

``This is going to be the biggest market in the world one day,'' the official said of China. ``They are going to say, `Are you ready to supply this market? Are you ready to be a player?' ''

The Dalian facility employs 840 and operates seven days a week in four shifts a day. Included in the total is capacity for up to 200,000 run-flat tires, a separate investment project disclosed in 2005.

Goodyear Dalian-majority control of which Goodyear acquired in 1994-accounts for about 10 percent of Goodyear's global tire production, according to Pierre Cohade, president, Asia Pacific Region, Goodyear Tire Management Co. (Shanghai). And this share is going to grow. The company declined to say what its sales are or what its export ratio is.

Goodyear Dalian is part of Goodyear's Asia-Pacific unit, which accounted for 8 percent, or $640 million, of the Akron-based tire maker's global sales last year.

In the region, Goodyear also operates tire plants in India, Indonesia, Malaysia, the Philippines, Taiwan and Thailand. Goodyear moved its regional Asia-Pacific headquarters in January to Shanghai from Akron. In addition, Goodyear expects to source $600 million to $800 million in materials from China by 2010.

Supplying China's OEMs

Domestically, Goodyear is the exclusive supplier of tires for BMW in China. It also supplies original equipment tires to Shanghai Volkswagen Automotive Co., FAW-Volkswagen Automobile Co., Great Wall Motor Co., Brilliance Jinbei Automobile Co., Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. ventures in that nation.

Among the OE customers, Cohade singled out Chery Automobile Co., which uses Goodyear tires for its high-end and export products. ``I see Chery making very fast progress. I'm just impressed,'' he said.

In the aftermarket, Goodyear sells through a network of 700 independent, Goodyear-branded stores in China, which together Goodyear calls its Goodyear Authorized Service Network. Chinese customers are first-generation drivers and are relatively loyal, Cohade said. They do not seem to switch brands and tires.

In the Dalian factory, Goodyear increasingly is using Chinese suppliers developed over the years with Goodyear technology. Those suppliers include Jiangsu Xingda Steel Tyre Cord Co. Ltd. for steel cord; Jiangsu Junma Group for nylon 6 yarn; China Shenma Group for nylon 6,6; and Jiangxi Black Cat Carbon Black Co. for carbon black.

Natural rubber is for the most part still imported from Indonesia, including some from Goodyear's former rubber plantations in Indonesia, which were sold to Bridgestone Corp. in 2006.

Included in the expansion project are the latest VMI 348 tire-building machines made in Holland. Existing two-stage tire building equipment will be shipped to Goodyear India Ltd., allowing it to build high performance tires, the spokesman said.

Goodyear Dalian is 25-percent owned by Dalian Bingshan Group Co. Ltd., but Goodyear executives said the minority shareholder is not involved in the management of the company.

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