(From the Sept. 17, 2012, issue of Rubber & Plastics News)
AKRON—The world's major tire makers committed a record $10 billion in capital investments in the past year to expand and upgrade their manufacturing operations worldwide, according to an analysis of available data.
The investments tracked by Rubber & Plastics News represent potential global output of nearly 250,000 units of new daily consumer and commercial tire capacity, including a dozen greenfield tire plants.
The total topped the amount budgeted during 2010-11 by about 6 percent and exceeded the previous high of $9.6 billion committed during the 2007-08 period, according to the data. The totals are for projects publicly announced and therefore represent only part of the overall investment picture for the global industry.
The largest share of the capital expenditures, roughly $2.9 billion, will be invested in Asia. That amount compares to $2.75 billion earmarked for projects in North America.
More than $1 billion is committed to projects in Europe, with the bulk going to Eastern Europe. The remainder of the expenditures are split between Latin America and Africa/Middle East.
The investments represent at least 222,000 units of new daily passenger tire capacity, 23,000 units of new daily truck tire capacity and roughly 600 metric tons of new daily off-highway (farm, off-the-road, etc.) tire capacity.
On the other side of production capability, only one plant is closing, representing 50,000 units of daily capacity.
For the second year running, Bridgestone Corp. topped the investment ladder. The firm has committed $2.6 billion in spending to seven major projects, including three greenfield plants.
Fellow Japanese tire maker Yokohama Rubber Co. Ltd. checks in at No. 2 with $1.75 billion in committed spending. However, the company's expenditures are spread out over four years, through 2017.
Pirelli & C. S.p.A. is No. 3 with $1.12 billion to support projects in Asia, Europe, Latin America and North America.
Michelin's total for the year was just shy of $1 billion.
As for total capital expenditures committed during the major companies' most recent fiscal years, spending by most companies was up double digits in 2011 over 2010. The ratio of capital expenditure to sales rose by nearly a full point to 7.1 percent, according to analysis of the firms' financial data.
At least three firms—South Korea's Nexen Tire Corp., Finland's Nokian Tyres P.L.C. and China's Shandong Linglong Rubber Co. Ltd.—more than doubled capital spending in 2011 over 2010.
At the same time, the major tire manufacturers' spending on research and development slipped slightly to just shy of 3 percent of sales from 3.2 percent a year ago. Some of the decline may be attributed to the rapid sales growth last year, fueled by higher selling prices driven up by rising raw materials costs.
The major projects, listed alphabetically by tire company, are:
Advanced Tire Factory
* $240 million for a car and truck tire factory in Yanbu, Saudi Arabia; investment coming from Arab investing/trading companies Al-Muwakaba for Industrial Development & Overseas Commerce and Bin Jarallah Group. The plant reportedly would produce 1.8 million tires annually starting in 2015.
Alliance Tire Group
* $160 million for a second plant in India, according to the World Bank's International Finance Corp., which disclosed the project in connection with its considering loaning Alliance funds for the project.
According to the documents, Alliance is considering building a facility in Jhagadia Kharchi Extension in Gujarat, India, with a capacity of 50,000 metric tons per year. It also is expanding its plant in Tirunelveli, India, by 29,000 tons per year.
Apollo Tyres Ltd.
* $55 million through 2014 for off-highway tire (farm, fork-lift, dumpers, graders, etc.) capacity at its 17-year-old plant in Kalamassery, in Kerala Pro-vince, India.
* About $135 million for a greenfield tire plant in Eastern Europe. According to Vice Chairman Neeraj Kanwar, Apollo wants to begin making tires within five years either in Poland, Hungary or Slovakia.
* $150 million to boost capacity for truck and bus radials at its plant in Szczecinski, Poland, by 56 percent by the second half of 2014, boosting daily capacity to 3,750 units.
* $151 million to expand capacity at its Des Moines, Iowa, agricultural tire plant, up from $77 million announced in April 2010. The investment will be used to enhance the core manufacturing areas of tire building, curing and support equipment.
* $117.5 million at the Brisa Bridgestone Sabanci plant in Izmit, Turkey, to expand capacity by an undisclosed amount beyond the listed capacity of 10 million tires a year.
* $36.6 million through early 2013 in its Warren County, Tenn., truck tire plant to expand daily capacity 11 percent to 9,000 units.
* $1.2 billion in the coming two and a half years to build a radial OTR tire plant in Aiken County, S.C., and expand capacity for passenger and light truck tires at the existing Aiken site by 8,000 tires a day, or nearly 29 percent, to about 35,500 units.
Bridgestone did not disclose the new plant's projected capacity. A similar-sized investment under way in Japan is slated to raise the capacity of a three-year-old factory in Kitakyushu to 130 metric tons a day.
* $75 million to expand capacity for OTR-tire-grade steel cord 10 percent at its plant in Clarksville, Tenn., to more than 180 metric tons a day.
* $457 million for a passenger tire facility in Hai Phong City, Vietnam, capable of producing 24,700 units daily by early 2016. Tires built there will go primarily to the European, North American and Japanese replacement markets.
* $60.5 million to boost capacity for small and medium-size radial OTR tires at its Hofu, Japan, plant by nearly 15 percent to 94 metric tons by the first quarter of 2014.
* $500 million over three years for a car and light truck tire plant in Sumter, S.C., that should open in 2017 with an annual capacity of 5 million units. A second phase expansion will add 3 million more units by 2021, and Conti said the 33-acre site is sufficiently large to accommodate truck tire capacity as well.
* $215 million to expand its car tire factory in Hefei, China, to 8 million tires a year by 2015.
* $13.5 million for a rubber mixing line at its Port Elizabeth, South Africa, tire plant.
* $11 million in China for a bicycle tire operation on the grounds of its Hefei car and light truck tire factory.
* $71 million through 2013 in its newly acquired tire plant in Modipuram, India, to expand bias-ply truck tire capacity and add annual capacity for radial car (900,000 units) and truck tires (230,000 units).
Cooper Tire & Rubber Co.
* $67 million over three years to upgrade a radial car and light truck tire factory in Krusevac, Serbia, that Cooper bought in April for about $17.4 million. Annual capacity at the site will be expanded to 3 million units.
P.T. Gajah Tunggal Tbk.
* $150 million to add radial truck/bus tires to the firm's portfolio in the coming three years, building gradually to 1,500-2,000 tires per day.
* $108 million to build a tire proving ground on 267 acres of land in Karawang, Indonesia.
* More than $300 million through 2020 to add capacity for passenger tires and super-large tires at its plants in the Omsk region of Russia. The former Sibur Russian Tyres did not disclose more specifics of its plans.
Kenda Rubber Co. Ltd.
* $333 million to build a factory for car, light truck, trailer and motorcycle tires in Huizhou, China. The plant, Kenda's fifth in China, will have the capacity to produce 83,000 radial tires per day by 2016.
* $330 million for a manufacturing operation in Taiwan's Changhua Province capable of making 25,000 auto and light truck tires a day.
* $175 million to expand capacity at a factory in Tianjin, China, to 45,000 units daily by mid-2013.
* $250 million to expand OTR tire capacity at its Nippon Giant Tire Co. Ltd. subsidiary in Tatsuno, Japan. The investment will add capacity for 57-inch tires in the short term and 63-inch tires longer term.
Hangzhou Zhongce Rubber
* $165 million budgeted for a plan to build a radial car and truck/bus tire plant in Thailand. At last report the project was on indefinite hold.
Hoosier Racing Tire Corp.
* $8 million to expand rubber compounding capacity at its race tire plant in Plymouth, Ind., to support growth.
Horizon-Addis Tyre Share Co.
* $62.5 million to add up to 200,000 units of annual car and light truck radial capacity to the nine-year-old plant in Addis Ababa, Ethiopia.
* $750 million during the next few years to build a greenfield OTR tire plant in Starr, S.C., and expand an existing OTR site in Lexington, S.C. Capacities were not disclosed for either project. At the existing Lexington unit, capacity is estimated to be more than 50,000 metric tons a year.
* $227 million over five years to expand annual capacity at its Tigar Tyres d.o.o. subsidiary plant in Pirot, Serbia, 50 percent to 12 million tires.
Pirelli Tyre S.p.A.
* $190 million to push capacity at its recently opened car tire plant in Silao, Mexico, to 5.5 million units annually by 2017, or 57 percent above its initially rated capacity of 3.5 million tires a year.
* $276 million through 2014 to upgrade mixing room and finishing quality control at plants in Kirov and Voronezh, Russia, part of Pirelli's joint manufacturing and distribution venture with Russian Technologies State Corp. Capacity at the Voronezh factory should double to 4 million units a year by 2014, and by 2015 will produce only Pirelli-brand tires.
* $500 million over several years to build a radial truck tire factory in or near Merlo, Argentina, that should have annual capacity of 700,000 units by 2014 and eventually double that amount.
* $31.5 million over several years in product development and manufacturing upgrades at its car and light truck tire site in Carlisle, England.
* $120 million during four years to build a motorcycle tire plant in Indonesia in a 60/40 joint venture with P.T. Astra Otoparts Tbk. The factory will open with an estimated annual production of about 2 million tires by early 2014 and reach 7 million units by 2016.
Specialty Tires of America Inc.
* $1.5 million in a three-year period to modernize and reconfigure its Indiana, Pa., headquarters plant for expanded radial tire capacity.
J.S.C. Southern Rubber
* $160 million over four to five years for a factory in Binh Duong Province, Vietnam, for all-steel radial tires. Annual capacity should start at 350,000 units and increase to 600,000 units by 2015 and 1 million units by 2017.
Toyo Tire & Rubber Co. Ltd.
* An undisclosed amount to consolidate its technical staff and resources at one facility in Kawanishi City, Japan.
Yokohama Rubber Co. Ltd.
* More than $1.75 billion through 2017 to add as much as 20 million units of annual production capacity worldwide.
Yokohama did not specify individual projects at this time, saying only that it will look at building an as-yet undisclosed number of plants, with sites in North and South America, China and India under consideration. The company said it also might expand existing plants in the Philippines, Thailand, Vietnam and Russia.
The expansion plan is on top of projects under way at facilities in Russia, China, Philippines and Thailand. Those projects will boost the company's annual capacity by 7 million units, or about 12.5 percent, to 66 million units by 2014.