MOUNT VERNON, Ill. — Continental Tire North America Inc. will spend another $78 million to expand and upgrade its Mount Vernon tire plant during the next 18 months.
The investment will be used to enlarge the facility by more than 150,000 square feet and add tire building machinery, storage and other equipment, according to Hank Eisenga, vice president of manufacturing for Continental Tire North America.
Production capacity at the passenger and truck tire factory will increase by an undisclosed amount, the company said.
The facility is spread across 58 acres, spanning 2.8 million square feet under one roof. It is Continental´s last remaining tire plant in the U.S.
Conti´s newest expansion brings to $160 million the amount the manufacturer has invested in the Mount Vernon factory in the last year and a half and will equip the 33-year-old plant to ultimately fill 90 percent of the firm´s U.S. market production, said Tom Roydhouse, executive vice president of commercial vehicle tires.
That will free up global capacity at plants in Europe and Asia, Eisenga said.
"That´s a significant accomplishment considering the problems other tire makers face in the U.S. in terms of having to deal with high manufacturing costs," he said. "But we´ve proven we can produce quality tires cost effectively in the U.S."
Another 20-25 workers could be added to the plant´s work force of 2,200 when the expansion is complete, Eisenga said, while its technology will be improved and greater efficiencies will be introduced.
But the expansion primarily will allow the company to retain jobs, he said, pointing out that "in today´s competitive business environment, state-of-the-art equipment is imperative to success. However, increased efficiency often results in leaner staffing, so job retention is a very important goal."
Construction of the addition probably will begin within the next month and be completed by the end of 2008, Eisenga said.
"We have an extremely aggressive ramp-up plan in place for this project," he said. "We want it done as quickly as possible so we can get product out and into the marketplace because that´s critical for all of us."
The decision to make another large investment in the Mount Vernon facility was based on the return potential, he said. "We´re extremely excited because we have been able to make a significant return on investments so far, and we´ll continue to do so."
Conti´s latest expansion is in addition to the almost $100 million investment program the company launched last year to bolster both its passenger and commercial divisions at Mount Vernon and make the factory cost effective globally.
The company´s target was to spend between $70 million and $100 million to improve and modernize the factory by 2009.
"We´ve spent $84 million in a year and a half," so that project is well ahead of the timetable, according to Eisenga.
In 2006, Conti added a $17.8 million tandem mixer as part of its capital investment program, which included several smaller expansion projects. It´s also in the process of completing a warehouse expansion that adds about 225,000 square feet to the facility.
"We´ve made major improvements at our facility," he said. "The gains and improvements have put us close to our European plants. And we´re not through yet. They enhance our position from a competitive standpoint within the company."