SUBANG, Indonesia—P.T. Astra Otoparts Tbk and Pirelli Tyre S.p.A. have broken ground on their $130 million joint venture motorcycle tire plant, with initial production anticipated before year-end 2014.
The plant, being built in Desa Wanakerta, Subang, West Java, is expected to come on stream with an initial annual production capacity of 2 million bias-ply motorcycle tires, ramping up to 7 million units when fully operational, Astra said.
Desa Wanakerta is a developing industrial area about 50 miles east of Jakarta, Indonesia. The project is being built on a 62-acre plot of land the partners acquired there.
Pirelli and Astra, a Jakarta, Indonesia-based automotive components maker, disclosed plans for the joint venture in mid-2012.
Pirelli owns of 60 percent of the company—dubbed P.T. Evoluzione Tyres, or Evoty.
The partners have agreed to allocate 40 percent of the plant's output for domestic sale through Astra Otoparts' distribution network.
The recent ground-breaking ceremony was overseen by Paolo Benea, president director of Evoty, and Rahmat Ependy, head of Purwadadi sub-district, Subang.
Pirelli and Astra earlier said the factory will employ 750 at full production.
This will be Pirelli's fourth production site for motorycle tires; the others are in Breuberg, Germany; Gravatai, Brazil; and Yanzhou, China.
Two-wheeler tires account for about 7 percent of Pirelli's global revenue.