Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
  • Tire Business
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Tire
    • Airless Tires
    • Non-Tire
    • More News
    • Suppliers
    • Silicone
    • Latex
    • Technical Notebooks
    • Opinion
    • Online Exclusive
    • Special Reports
    • Automotive
    • Executive Action
    • Government/Legal
    • Sustainability
    • Blogs
      • Products
      • Wacky World of Rubber
    • Best Places to Work
    • War in Ukraine
    • Rubber Division IEC
    • ITEC
    • Women Breaking the Mold
  • PFAS
  • Custom
    • Sponsored Content
    • White Papers
  • Resources
    • Directory
    • Classifieds & Mold Mart
  • Data
  • Events
    • RN Events
    • RN Livestreams/Webinars
    • Industry Events
    • Past Events
    • Rubber News M&A Live
    • PFAS Live
    • Ask the Expert
    • International Tire Exhibition & Conference (ITEC)
    • Women Breaking the Mold Networking Forum
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. News
May 04, 2015 02:00 AM

Goodyear taps Mexico for new tire plant

Chris Sweeney
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Goodyear CEO Richard Kramer at the firm's announcement of its new manufacturing plant in San Luis Potosi, Mexico.

    SAN LUIS POTOSI, Mexico—Goodyear will invest at least $500 million, and as much as $550 million, to build a new tire factory in San Luis Potosi to serve its customers in the Americas.

    Chairman and CEO Richard Kramer made the announcement April 24 in a ceremony with Mexico President Enrique Pena Nieto. The executive said Goodyear plans to break ground on the facility in June.

    It will be Goodyear's first tire manufacturing plant in Mexico. The firm operates six in the U.S., two in Canada and five in Latin America—in Brazil, Chile, Colombia, Peru and Venezuela.

    “This is an important investment in Goodyear's future,” Kramer said in a statement. “Our new factory will provide us with a world-class manufacturing asset and will be a strong complement to our existing plants in North America and Latin America. The new plant advances our strategy to serve the needs of our customers and is consistent with our focus on investing in high return projects that drive profitable growth.”

    Goodyear said the car and light truck tire factory is projected to begin production in mid-2017 and that it will be the firm's most technologically advanced with the capacity of about 6 million tires per year.

    A company spokesman said the company has not outlined capacity scale-up targets yet.

    Once it reaches full production, employment is projected to reach 1,000 people. Goodyear did not disclose how big it projects the building to be.

    Goodyear selected San Luis Potosi after an extensive review of potential locations throughout the Americas. The process took into consideration such factors as cost structure, logistics, infrastructure, skilled work force, tariffs and quality-of-life issues.

    Other sites considered

    The spokesman said other sites in the U.S. and Latin America were considered, but the firm did not elaborate as to which other ones were in contention. In September 2014, Goodyear said it had ruled out Akron as a possible location.

    Kramer said the plant's central geographic location is another strength. San Luis Potosi is near three major cities—Mexico City, Monterrey and Guadalajara—and four major ports in Tampico, Altamira, Manzanillo and Mazatlan.

    “In the end we chose a location where we could best serve both our Latin American and North American markets, including Mexico,” the spokesman said. “This location has the infrastructure and the skilled work force necessary to provide our customers high quality tires in a timely manner.”

    Goodyear said the new factory will be zero waste-to-landfill and a zero solvent facility, use natural gas and energy efficient LED lighting, and state-of-the-art dust collection equipment to meet the firm's commitment to the environment.

    The new factory will enable Goodyear to meet the strong and growing market demand for high-value-added consumer tires in North America and Latin America, the company said. Industry demand for these kinds of tires is expected to increase by 10 million tires per year in the Americas from 2014-19.

    Goodyear projects HVA tire demand to grow by about 18 million units per year and low-value-added products declining by about 8 million units per year.

    “Demand for our high-value-added tires and those throughout the industry, is high and growing,” the spokesman said. “Our difficulty has been producing enough of those tires to satisfy demand and meet our customers' needs. This new plant when it comes online, along with the investments we're making at our existing plants, will help us respond to consumer demand.”

    In its first quarter earnings presentation on April 29, Goodyear projects the regional market for HVA tires to increase by about 90 million units and take up 74 percent of the market by 2019. According to the firm, HVA tires currently account for about 62 percent of the market at about 270 million units.

    “Having recently met with many customers in Latin America and North America, their excitement and commitment to Goodyear is palpable,” Kramer said on an April 29 conference call discussing the firm's financials. “They view the investment as a tangible sign of Good-year's commitment to growth. It was a clear demonstration, to me, of the value of being a Goodyear partner.”

    Automotive growth

    Karan Chechi, research director at TechSci Research—a global market research and consulting company that operates in a number of industries, including automotive—said in an email that light vehicle production in Mexico reached a new milestone in 2014, surpassing 3 million vehicles.

    TechSci projects annual vehicle production to reach 5 million units by 2020, with some of that being exported to neighboring markets.

    The increase has led to growth of domestic original equipment tire sales, with passenger car sales growing at a compound annual growth rate of more than 10 percent from 2010-14, Chechi said. The number of passenger cars in use in Mexico crossed the 24 million mark in 2013 and is expected to see continued growth.

    “The existing domestic supply of tires is insufficient owing to which Mexico imports a substantial quantity of tires into the country,” Chechi said.

    There are currently nine tire plants operated by six firms in Mexico—Bridgestone Corp., Continental A.G., Cooper Tire & Rubber Co., JK Tyre & Industries Ltd., Michelin and Pirelli & C. S.p.A.

    Automotive OEMs also are expanding in Mexico, most recently Toyota announcing a $1 billion new assembly plant and Ford investing $2.5 billion in two new facilities.

    Chechi, however, said used tire imports is one issue facing Mexican domestic tire manufacturers. TechSci said 25 percent of the tires sold in Mexico's replacement market are used tires imported from the U.S. Tire makers in Mexico face stiff competition from both authorized and unauthorized used tire imports.

    “It is considered to be extremely difficult for the U.S. and Mexican authorities to control the flow of goods from this border,” Chechi said of the U.S.-Mexico border that spans about 2,000 miles. “About 5 million units of used/scrap tires enter into Mexico's tire industry every year, which negatively influences the sales of brand new tires in the country.”

    The analyst said these tires are sold for about one-third of the price of new tires.

    Decision disappoints union

    The United Steelworkers said it is “disappointing, but not surprising” that Goodyear decided to build its next plant in Mexico, in a statement released April 24.

    “USW members at Goodyear have been willing partners and have repeatedly shown their commitment to championing the success of the company,” International President Leo W. Gerard said in a statement. “Together we worked hard to help turn the company around, and the USW has led the fight to stop a flood of unfairly priced tires from China.” 

    The USW said when it became clear Goodyear was going to build its plant outside of the U.S., the union began discussions with the company to maximize investments in existing facilities employing USW members here in the U.S.

    The union could not be reached to comment further. The USW represents 850,000 workers in North America and has a master labor contract that runs through 2017 with Goodyear's six U.S. manufacturing plants—in Akron; Gadsden, Ala.; Buffalo, N.Y.; Topeka, Kan.; Danville, Va.; and Fayetteville, N.C.

    Tom Conway, USW international vice president, leads the union's Goodyear bargaining team.

    “Our efforts have significantly contributed to the return to prosperity for the company's North American operations,” Secretary-Treasurer Stan Johnson, who also heads the union's rubber and plastics sector, said in a statement.

    “That makes Goodyear's decision particularly troubling,” he said. “Unfortunately, in today's world of manufacturing and finance, that's increasingly the decision corporations make. Our trade policies drive our companies to produce outside the United States with Wall Street reaping the benefits.”

    Related Articles
    Goodyear, PPG collaborate on new tire line
    Tire demand in Mexico projected to grow 7.5 percent
    GM selects Goodyear as OE on 2016 Camaro
    Goodyear reaches agreement for rice husk silica
    USW says Goodyear to invest more in U.S. plants
    Goodyear unveils video look at Mexico plant
    Goodyear breaks ground on Mexican plant
    Letter
    to the
    Editor

    Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    Most Popular
    1
    Stephenie Davis, Davis Industrial | Women Breaking the Mold
    2
    3 key issues the UAW is fighting for in Detroit 3 contracts
    3
    Breaking molds, inspiring an entire industry | Women Breaking the Mold 2023
    4
    Updated: Arlanxeo to close butyl plant in Belgium
    5
    GM idles Kansas plant, Stellantis enacts layoffs as UAW strike continues
    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Tire
      • Airless Tires
      • Non-Tire
      • More News
        • Automotive
        • Executive Action
        • Government/Legal
        • Sustainability
        • Blogs
          • Products
          • Wacky World of Rubber
      • Suppliers
      • Silicone
      • Latex
      • Technical Notebooks
      • Opinion
      • Online Exclusive
      • Special Reports
        • Best Places to Work
        • War in Ukraine
        • Rubber Division IEC
        • ITEC
        • Women Breaking the Mold
    • PFAS
    • Custom
      • Sponsored Content
      • White Papers
    • Resources
      • Directory
      • Classifieds & Mold Mart
    • Data
    • Events
      • RN Events
        • International Tire Exhibition & Conference (ITEC)
        • Women Breaking the Mold Networking Forum
      • RN Livestreams/Webinars
      • Industry Events
      • Past Events
      • Rubber News M&A Live
      • PFAS Live
      • Ask the Expert
    • Advertise
    • DIGITAL EDITION