It´s just a coincidence the two newest tire plants in the U.S. ended up roughly 30 miles from each other in rural Georgia, an hour or so west of Atlanta.
But while the operations of Pirelli Tire North America Inc. and Toyo Tire North America Inc. differ in many respects, they share this one goal: using a high-technology process to enable tires to be produced competitively in the U.S.
Pirelli uses its Modular Integrated Roboticized System at its plant in Rome so it can bring volume on incrementally, by adding modules as needed. The firm also doesn´t have on-site mixing, opting instead to buy its rubber materials from outside vendors.
Right now, Pirelli operates four modules, each capable of making roughly 125,000 tires a year. The facility, however, can accommodate up to 17 modules.
"In our case, one of the advantages of MIRS is that it´s very scalable," said J. Steven Carpino, Pirelli Tire North America vice president of research and development. "We can start very small with a few hundred tires a day and still be profitable getting mixing on the outside."
The Toyo way
Toyo, meanwhile, utilizes its Advanced Tire Operation Module production system. Its process more closely mirrors the flow of a traditional tire operation but is highly automated, starting with the mixing department through the entire system. No human hands touch the tire until first inspection.
Annual production at its facility in White stands at about 1.2 million tires, but officials are hoping for approval in the near future on what they term a "Phase 1.5" expansion, which would add production modules to fill out open floor space.
The site can handle future physical expansion phases, depending on company growth and market conditions.
"It´s not an automated machine, it´s the whole process," said Jim Hawk, Toyo Tire North America senior vice president and plant manager. "It´s from mixing all the way through-very unique and very special."
At home in Rome
Pirelli started production at its Rome facility five years ago. There was no doubt the plant would be located in Georgia, where numerous counties were trying to lure the Italian tire maker, according to President and CEO Gaetano "Guy" Mannino. "Floyd County was very active in soliciting our business," he said. "I think there also was some emotional involvement in deciding on a name like Rome, Ga."
A major part of Pirelli´s strategy in making tires competitively in the U.S. is focusing on producing a high-profit product range.
"If you go into the U.S. with commodity products, most likely you will not be able to compete with China and all the other competitors because of the cost of labor and legacy costs," Mannino said. "If you want to be here, you have to have high-tech products, and I think with a very strict control of costs you are able to compete."
Mannino said Pirelli also benefits in Rome from not having to bargain with a union work force or pay legacy costs-luxuries it didn´t have at the former Armstrong Tire Co. plants in the U.S. it purchased and later closed. Employment at the Rome location is 230 overall, with just 120 of those in the factory.
"The wages that we offer here are competitive for the area," he said. "They´re not comparable to other classic tire sites in the country, but they are competitive against the textile business and all the businesses you find around Rome."
Pirelli also is banking on the flexibility of its MIRS system to keep its manufacturing operations cost-competitive.
With traditional tire production, there are basically five distinct operations that take place as separate processes, with inventories built and kept at each intermediate point, Carpino said. MIRS, however, brings the tire making process into one rectangular footprint that measures roughly 50 feet by 150 feet.
"We do all the building and curing in a continuous process with really no intervention by any technicians or traditional operators handling the tire at any stage, or building any intermediate inventory unique to any given size of tire," Carpino said. Boosting production is as simple as putting in a new module, without installing some of the large equipment that typically come with such projects.
Pirelli also saved itself the huge upfront cost of putting in an on-site compounding operation, opting instead to buy from the outside, with current vendors being Excel Polymers L.L.C. and AirBoss of America Corp., officials said.
"We treat the outside mixing operation as if they were a Pirelli factory," Carpino said. "Mixing recipes, the way it´s mixed and the time that it´s mixed are all specified by us in the same way we would in a Pirelli factory."
MIRS is best suited for the smaller runs of just 200-300 pieces of a tire, the kind of production not suited to big factories where frequent changeovers drive up cost. With MIRS, Carpino said the raw materials and components are the same for all tires, with the built-in computer software determining what size and type of tire is built.
"People always ask, ´What is the smallest lot you could produce?´ and we always say in theory we could produce a lot of one," he said.
On the contrary, he said MIRS wouldn´t be used for large runs of a particular tire line or to make tires requiring different compounds.
One job that totally differs is that of the tire design engineers, who Carpino said now are much closer to the production process. "The specifications that we give to the MIRS line are the three-dimensional coordinates in space on where we want that robot to be holding the drum at any given moment in time," he said.
Carpino, though, knows that as advanced as MIRS is, it must give Pirelli an advantage in the marketplace. He said those benefits come in terms of tire uniformity, balance, the absence of joints and splices, and the repeatability of the process. "We´re not in the business of producing interesting, highly automated manufacturing processes. We´re in the business of selling tires," he said.
Making mark in White
Toyo located its new ATOM plant-production started in late 2005-in the U.S. for several reasons, according to Carlos Kibata, president of Toyo Tire North America.
First was the fact that its automated process makes labor costs lower compared with traditional tire making. "If we were investing in traditional manufacturing, we would do so in Asia because labor costs are cheaper over there," he said.
And while current labor costs in China are cheaper and currency exchange rates are favorable, that may not be the case over the next 10-20 years. Kibata said it´s already happening to some extent, with the competition for workers driving up labor costs.
Toyo also wants engineer-type employees to work in its advanced facility, and engineers are difficult to recruit in China because of intense competition.
Transportation costs also were a factor. Toyo´s product mix at the White facility focuses on larger tires, which are more expensive to ship than smaller tires. "On the West Coast, there´s not enough container-receiving capacity at ports and no area to construct new ports," Kibata said. "Sooner or later, port congestion will get worse and worse. That means ocean freight costs will keep increasing because of demand and supply issues."
Toyo studied but never seriously considered buying an existing tire plant, he said. "Then we would have had less flexibility to invest money to make a more productive system."
Like Pirelli and MIRS, Hawk said the advantages of the ATOM include tire uniformity and process repeatability, along with 100-percent jointless tires.
Toyo´s system also allows it to have only about four hours of green tire inventory, compared with 12 to 24 at a traditional factory, Hawk said. And he estimates a traditional tire plant would need about twice the 370 Toyo employees and require 40 percent more floor space.
He wouldn´t give the average wage at the plant, but said pay will be competitive to the new wage structures being negotiated in the current round of master contract talks. The benefit plan also is as good as any factory, but Hawk claims Toyo´s cost per employee is significantly lower because it has flexibility in negotiating with different carriers more frequently-not just at contract time.
Many states tried to attract Toyo, but Kibata said it opted to be near Atlanta because of its convenient location in serving a good portion of the U.S., as well as Mexico and Canada.
Hawk said the Quick Start training program offered by Georgia was a big selling point. Rather than giving a grant based on how much money is spent and how many jobs are created, Quick Start-also utilized by Pirelli-instead sets up and conducts the entire training program for a new employer.
"We didn´t have to organize that effort," Hawk said. "Having the money would have been nice, but I wouldn´t know what to do with it. We would have wasted six months to a year devising the programs."