Titan International Inc. plans on permanently closing one of its two idle tire plants and possibly opening the other as part of a joint venture with an undisclosed Asian tire manufacturer.
The Quincy-based tire and wheel maker is looking to sell tire-building equipment at its Natchez, Miss., facility, possibly to firms in China or India, according to Maurice Taylor Jr., Titan president and CEO.
The Natchez site-which produced farm and construction tires-was mothballed in 2001 because of the economic recession and never reopened.
Titan also closed its Brownsville, Texas, plant beginning with a temporary shutdown in May. But there is potential for it to reopen sometime in 2004 if the joint venture goes forward, though no deal has been completed, Taylor said.
It could take at least three months to work out an agreement-which would include at least a partial sale of Titan's equipment in Brownsville-with the potential partner, he said. The facility would manufacture consumer tires for all-terrain, lawn and garden and other specialty vehicles as it did before the shutdown, generating perhaps as much as $100 million in sales, Taylor said.
Titan's factory in Des Moines, Iowa, primarily a farm and construction tire operation, now is producing all the company's in-house tires. The facility is slated to have capacity to produce tires in the $200 million range in 2004, Taylor said in the company's Feb. 27 release of 2003 fourth-quarter and year-end finances.
Titan values the equipment at Natchez and Brownsville at $32.9 million, according to its 10-K filing with the Securities and Exchange Commission.
The company also is selling idled wheel-making plants in Greenwood, S.C., and Walcott, Iowa. The bulk of Titan's wheel-making capacity now is located at its Quincy facility, which has been expanded to the point it can generate $220 million worth of output, the company said.
Funds generated by the asset sales will be used to reduce Titan's debt. The company's long-term debt stood at $248.4 million at year-end.
The decisions at the tire-making plants will end the long, unusual journey for Titan in Natchez and possibly provide a second chance for the much-hyped Brownsville factory.
Titan took control of the former Fidelity Tire Manufacturing Corp. facility in Natchez in September 1998 when it bought the assets of bankrupt Fidelity parent Condere Corp. Shortly afterward, the United Steelworkers local staffing the plant went on strike after negotiations with Titan failed, and the firm began running the factory with replacement workers.
Employment at the site swelled to the 330-worker range as production increased, but when downturns in the overall economy and specifically the agricultural market hit Titan hard, operations in Natchez slowed down. In February 2001, Titan announced it was stopping tire production and reducing the site to a mixing facility, then three months later shut down production indefinitely.
Titan finally came to contract terms with USWA Local 303 in December 2001, as well as USWA Local 614 at its Des Moines plant, in September 2001, ending the two longest strikes in tire and rubber history. But in the Natchez pact, Titan only agreed to keep the site open through November 2002, leaving it free to close the facility after that date.
Financial woes also have hindered the potential for success in Brownsville, which was to be the jewel of the company's tire operations. The first tire plant built by the firm, the 1-million-sq.-ft. facility had its groundbreaking in November 1996. Delays in production and negative conditions caused by the strike pushed the first tire production back until early 1999.
Midway through that year, manufacturing was halted and the company used the facility to rebuild equipment and train workers. When production resumed in January 2000, the plant began rolling out small specialty tires. The facility never made larger tires for Titan's main markets, and production never rose above 25-30 percent of capacity.
In early 2003, the company began laying off some of the 300 workers at the Brownsville site. Titan in May said it would close the unit for four months because of the negative sales impact of ongoing economic problems and imported tires from China.
In July, the firm said it was consolidating all its tire production in Des Moines. Since then, the Brownsville facility has operated as a warehouse and distribution center with about a dozen employees.