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Published on August 20, 2001

Closings, acquisitions reshape capacity landscape

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Date Published August 20, 2001

Global tire capacity changed more through contraction and acquisition than expansion in the past year.

Since mid-2000, the world's major tire makers have closed six plants-including three in Mexico and one in the U.S.-and Bridgestone/Firestone Inc.'s Decatur, Ill., facility is scheduled to shut down later this year. In addition, Bridgestone/Firestone has put workers at factories in Mexico and Argentina on notice their plants may be closed unless the company gets wage concessions.

On the other hand, only two factories of note have opened-Continental Tire North America Inc.'s satellite car tire facility in Timosoara, Romania, in late 2000, and Michelin North America Inc.'s farm tire plant in South Carolina in June 2001. Pirelli Tire North America Inc.'s new operation in Rome, Ga., is expected to be on stream in mid-2002.

Otherwise, changes in capacity have been highlighted primarily by Groupe Michelin's expansion strategy-a joint venture in China with Shanghai Tyre & Rubber Co. Ltd. and acquisition of the Silvania and Victoria tire plants from Romania's Tofan Grup. These two deals will add more than 9 million units of annual production capacity and boost Michelin's annual sales by at least $100 million.

Of the world's dozen largest tire makers, four reduced capital spending last year. On average, the dozen major players invested 6.1 percent of sales in fiscal 2000 in capital improvements, ranging from 4.2 percent at four companies to 16.9 percent at Hankook Tire Manufacturing Co. Ltd.



* The firm issued a plant closure notice for its Decatur, Ill., site in late June 2001. Scheduled to shut down by the fourth quarter, the factory's 1,900 employees make 24,000 tires per day.


* In early 2001, the tire maker closed its Hanford, Calif., passenger tire plant, eliminating 490 jobs and losing capacity of 10,000 units daily.


* The Queretaro and Tacuba, Mexico, facilities were shuttered in August 2000. Combined, the sites produced 9,200 tires per day and employed 800. But the Tacuba plant has since been re-leased to Compania Hulera Tornel S.A. de C.V.

* MSF Tire & Rubber Co. closed its Manila, Philippines, factory in early 2001. Its 800 employees produced 1 million units per year.

* In early 2001, the firm shut down its Kuingaiv, Sweden, plant. Dedicated to winter tire production, the C3M-based site had 100 workers.


* The Tultitlan, Mexico, facility, which employed more than 1,500 and made 20,000 tires daily, closed in April 2001.

* The company canceled plans in August 2001 to build a 1.2 million unit-per-year passenger tire plant in Glorhina, Brazil.

Titan International Inc.

* Its Natchez, Miss., factory was mothballed and staffing was reduced to a skeleton crew.

Expansions/new plants


* It invested $10 million and added 12,500 square feet to its Danville, Va., site, tripling production of radial aircraft tires.

* After an eight-year hiatus, the firm resumed production of aircraft tires at its Sao Paulo, Brazil, factory.


* It doubled capacity for passenger car and light truck tires at its Laem Chabang, Thailand, plant to 6 million units per year, much of which will be used to make 16-inch and larger tires for both Europe (performance tires) and North America (for sport-utility vehicles and light trucks).


* The firm is investing $60 million to add capacity for 2 million steel-belted radial car tires per year. The new capacity will be on stream in early 2002, and will bring passenger tire capacity at the plant to 7 million units annually. In a second phase of the project, due on stream in 2003, the company expects to create new lines for steel radial truck tires in sizes 17.5-, 21.5- and 22.5-inch, mainly for the domestic market.

P.T. Mega Safe Tyre Industry

* The company is expanding its radial tire factory in Salatiga, Indonesia, to 1.5 million units a year short term, and to as many as 4 million units a year by 2005.



* It has agreed to take majority control of Moscow Tire Plant. Conti will spend $43 million over three years to boost production of Taganka-brand tires to 5 million units annually from 2 million, and eventually make Continental, Barum and Gislaved passenger and light truck tires.

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