HANOVER, Germany (March 16)—Continental A.G. will build a tire plant in Brazil by 2006 as part of a $305 million, four-year plan to increase global tire capacity by 7 million car and 700,000 truck tires.
The investment sum also includes funding to expand capacity at the firm's Continental Sime Tyre operations in Malaysia. The new capacity will serve mainly to supply the North America Free Trade Association region, Conti said, where its supply of tires produced in low cost countries is lower than it deems necessary.
Conti will invest $183 million in the first phase and an additional $122 million to complete the project by 2008. The new output represents a 30-percent increase in the firm's global capacity.
"The new economical capacities are just what we need to turn our passenger tire business around in the NAFTA region and to attain profitable growth," said Martien de Louw, Continental's executive board member responsible for passenger tires. "We assume that the market in the NAFTA region will grow by 11 percent to 382 million passenger tires by 2008. We are getting ready now to deal with this growth."
In Brazil, Conti will set up plant in Camacari, Bahia, with production of car tires slated to start by early 2006 and commercial vehicle tires a year later. The project will create more than 1,000 jobs.
Prior to that, Conti said, Continental Sime Tyre will expand production at its sites in Alor Star and Kuala Lumpur, Malaysia, the latter with an emphasis on commercial vehicle tires.