KALUGA, Russia (July 1, 2011)—Continental A.G. has selected a site in Kaluga, about 100 miles southwest of Moscow, for a $320 million, 4 million unit-per-year car and light truck tire plant that should be on stream by year-end 2013.
The announcement culminates a year-long search for a suitable site for a tire plant and is the fourth major tire capacity expansion disclosed by Conti in the past few months. The expansions represent nearly $1.5 billion in investment and more than 12,000 units of new annual consumer tire capacity.
Kaluga is a city on the Oka River where vehicle makers Volkswagen A.G., Volvo A.B. and PSA Peugeot CitroÃ«n have assembly plants.
Nikolai Setzer, head of Conti's Passenger/Light Truck Tires division and member of the executive board, cited Kaluga's good infrastructure, central geographical location and Conti's positive experience with an existing automotive electronics plant there among the “special advantages” of the site.
Conti expects to break ground on the plant before year-end and be ready to start phase-one production by year-end 2013 with 400 employees. The plant will be engineered to allow Conti to double capacity “when the time comes,” Setzer said.
The Russian government has promised to support the new site, Conti said, without divulging details of what type of support.
By establishing production in Russia, the P/LT tire division will benefit from the removal of import duties and from reduced transportation costs, Mr. Setzer said.
Conti did not disclose the physical size of the plant or acreage acquired.