Tire makers that serve the North American market face contradictory needs: lower costs versus being close to the customer.
In the pursuit of lower costs, manufacturers are bringing in droves of tires from Brazil, China and other Asian locales. It's no secret that the U.S. and Canada rapidly are being abandoned as production sites for lower-margin passenger tires.
One of the biggest companies, Michelin, seems to be pursuing a strategy of balancing both low-cost and local production.
Yes, the firm did close one Canadian plant and downsized a U.S. facility last year, following the trend of reducing low-end tire production in the region. But just this month the France-based tire maker has announced plans to spend close to $1 billion on tire production in North America.
The largest chunk will go toward building a factory in Mexico, where labor costs are significantly lower than the U.S. However, $350 million is earmarked to improve and add jobs to Michelin North America Inc.'s four tire facilities in South Carolina.
The plant in Mexico will be Michelin's second in that country dedicated to passenger and light truck tires. Some of these tires will end up being exported to the other NAFTA countries, although Michelin mainly has earmarked them for distribution in Mexico, the fastest-growing tire market in North America.
The investment in the South Carolina facilities will be stretched over four years. It will add 100 jobs and increase the sense of security for the 7,850 already employed by Michelin in the state. This also follows a $41.5 million capacity increase, job-adding project at a Canadian passenger/LT tire plant, announced in July.
It's apparent Michelin, the most profitable tire maker in North America, is finding success through diversity-not away from the core tire products it makes, but where they are manufactured.