MALDEN, Mass. (Sept. 26, 2008) — The recent International Trade Commission antidumping ruling against certain Chinese off-the-road tire makers is forcing GPX International Tire Corp. to revamp its global marketing strategy and supply arrangements as it faces the short-term loss of tens of millions of dollars of business in the U.S.
GPX's pending sale of its Rumaguma plant in Ruma, Serbia, to Czech tire maker CGS Group is the most visible of the moves the company is making to shift its OTR tire resources temporarily away from the U.S. market in favor of customers in Europe, Asia and the Middle East, according to Bryan Ganz, co-chairman.
The sale agreement with CGS still needs Serbian antitrust authorities' approval, which GPX said it expects by late September. Terms of the deal weren't disclosed.
Selling the Rumaguma plant to CGS will allow GPX to redirect more resources to its Hebei Starbright Tire Co. Ltd. plant in Hebei, China, to make more sizes and types of OTR tires for non-U.S. markets, Ganz said. GPX will spend an undisclosed amount to upgrade and expand the Hebei plant, with an emphasis on radial farm, forestry and mining tires, he said.
At the same time, GPX is negotiating with a handful of non-Chinese tire companies about off-take production of tires it could sell in the U.S., Ganz said, without naming any of the possible partners or specifying a timetable for the changes.
The ITC ruling became effective Sept. 4. Starbright Tire was the hardest hit of the Chinese companies with new tariffs of up to 44 percent on its farm and small OTR tires. GPX is considering legal action over the ITC's Aug. 15 ruling.
The ITC decision affects GPX's activities in the U.S. only, Ganz said, meaning it's business as usual in Canada, Mexico and elsewhere in the Americas.
Also unaffected are GPX's solid and semi-solid industrial tires and its Aeolus truck tire program.
Along with the Rumaguma transaction, GPX agreed to transfer its Galaxy brand business in parts of Eastern and Central Europe to CGS, which will continue to make Galaxy-brand tires at the Serbian plant. This will allow GPX to continue to support its original equipment and aftermarket customers in that part of the world without any risk of a supply interruption, GPX said.
The sale should benefit CGS, Ganz said, because the Czech tire maker has much stronger distribution in the area and has favorable trade relations with Russia, one of its bigger customers. CGS was Rumaguma's largest customer, according to GPX.
CGS said it intends to consolidate its bias-ply tire production at the Rumaguma plant while converting its Czech plants to radial.
GPX called its 2003 purchase of Rumaguma one of the most successful privatizations in Serbia. In the past five years it has invested millions of dollars in Rumaguma, while at the same time increasing employment and doubling wages.