(From the Oct. 3, 2011, issue of Rubber & Plastics News)
AKRON—These are tumultuous times.
The economy is stalled, and fears of a double-dip recession have strengthened. The Eurozone is in a debt-inspired panic.
The seemingly never-ending election cycle has begun, when office-holders and those who want their power at any cost are interested only in brinksmanship, not solutions.
Sounds like a good time for a company to expand.
That has been the case in the world's tire industry, and it even includes expansions in—who would have thought—the U.S.
Altogether the world's tire makers have announced expansion projects in excess of $10 billion for the next 12 months or so, a record level. One can expect such projects in high growth areas, like Asia, or lower-cost regions likeàwell, Asia. But the U.S.?
The latest example of that is Bridgestone Americas' mammoth spending. The company has announced it will invest $1.2 billion to build an off-the-road tire plant, expand two others and increase the capacity of a truck and bus tire facility and a passenger and light truck tire plant.
Beyond their scope, the OTR projects aren't surprising. Bridgestone isn't the only tire maker needing capacity to serve that very hot market, fueled by demand from the mining sector. The world's craving for minerals extracted from mining seems insatiable and is expected to grow even more in the future.
Truck and bus tires—sure, there's definitely a need. Light truck and passenger tire capacity increases in the U.S. might give pause, but Bridgestone won't be making lower-value tires there; that's for plants in the low-cost countries. The Japanese company isn't the only tire manufacturer in North America expanding in that sector, either.
The tire makers won't invest such huge sums lightly.
Add up these projects, as well as other expansions by its competitors in North America, and the word that comes to mind to describe the tire manufacturers' state of mind is “optimistic.” This despite all the pessimistic economic and political conditions in the country and world today.
Optimism. Has a nice ring to it, doesn't it?