BUENOS AIRES, Argentina (Oct. 14, 2011)—Seeking to keep pace with growing demand in South America, Pirelli Tyre S.p.A. said will build a radial truck tire factory in Argentina a a cost of $500 million over several years.
The plant, to be built near the company's existing factory in Merlo, will come on stream in 2014 with annual production capacity of 700,000 units, Pirelli said, and employ 700. This first-phase project is worth $300 million.
A second phase, to double capacity to 1.4 million units, would require additional investment of $200 million and create 500 more jobs. Pirelli did not disclose a timetable for the second phase.
This latest investment is in addition to $100 million Pirelli is spending at Merlo to boost capacity 20 percent overall to 6 million units annually, including doubling capacity for the higher value-added SUV and light truck sizes. That project is expected to create 300 jobs by 2013.
Pirelli said it expects Argentine demand to absorb half of the plant's output, with demand from other countries in the Mercosur trading bloc taking the rest. Pirelli estimates its revenues in Argentina will reach $500 million this year, an increase of 40 percent from 2010.
The expansion will boost Argentina's share of Pirelli's global truck tire capacity to 13 percent from 10 percent. Pirelli also makes truck tires at plants in Turkey, Italy, Egypt, China and Brazil. Truck tires represent 28 percent of Pirelli's annual sales.