Goodyear breaks ground on Mexican plant

SAN LUIS POTOSI, Mexico—Goodyear broke ground July 28 at a formal ceremony for the first plant it will build in the Americas in a quarter of a century.

The 1 million-plus-sq.-ft. plant, representing an investment of up to $550 million, will be built on a 94-acre plot of land in an industrial zone on the southern edge of the city of San Luis Potosi in central Mexico.

The cornerstone will be laid in November, and the facility will be operational by July 2017, Martin Rosales, president and managing director of Goodyear Mexico, told dignitaries attending the ceremony.

Speaking at the ceremony, Jean-Claude Kihn, president of Goodyear Latin America since November, said the plant will have an annual production capacity of 6 million high-value-added tires, such as the Eagle F1 performance passenger and Wrangler All-Terrain Adventure with Kevlar light truck/SUV tires.

Rosales said Goodyear has signed an agreement with the CTM trade union, which will offer its representation to the plant's 1,000 blue-collar workers—most of whom will be local residents.

The CTM—Confederacion de Trabajadores de Mexico (National Confederation of Labor Unions)—was founded in 1936 and was once notorious for its belligerence. However, CTM-led strikes are a rarity today.

Asked for details of any financial incentives that Goodyear may have received from Mexico's federal, state and/or municipal governments to support its investment in a plant in Mexico, Rosales demurred before stating that infrastructure, including railroads, highways and inland customs services, and the “seriousness” of Mexican authorities were more important than financial incentives.

“These (financial incentives) are always short term,” he said. “Infrastructure is long term. This is much more important than a fiscal incentive.”

The San Luis Potosi plant is known within Akron-based Goodyear as the “Americas Project.”

Asked specifically whether Goodyear has plans to expand the facility over time, Darren Hayes-Powell, project director, said, “We have some capabilities to expand it, but it depends on the market.

“For us, this is the first plant we (will) have built in the Americas for 25 years. It's something we are really very excited about.”

The last new plant Goodyear built in the Americas was the radial car and light truck factory in Napanee, Ontario, which opened in 1990.

Hayes-Powell said San Luis Potosi is “really a Mexican plant, but it can supply the rest of Latin America and North America.”

According to Goodyear, light vehicle production in Mexico increased to 3.6 million a year between 2010-15 from 2.2 million, “and it's estimated it will grow to 5 million by 2020.”

The number of light vehicles on the road rose to 17 million today from 15.5 million in 2010 and is likely to reach 19 million in 2020, the tire maker added.

Goodyear has five tire plants in Latin America—one each in Brazil, Chile, Colombia, Peru and Venezuela. It operated a plant in Mexico, in Tultitlan, a dozen or so miles outside Mexico City, for 60 years, but shut it in 2001 “because its high costs are incompatible with current economic conditions,” the firm said at the time.

Rosales said when Goodyear decided to return to Mexico three years ago, five states, including San Luis Potosi—260 miles northwest of Mexico City—met all the requisites.

“Every one of them had what we had been looking for over a period of 10 months,” he said.

General Motors Co. has a car assembly plant in the city, while BMW A.G. plans to start assembling 150,000 vehicles a year at a $1 billion plant it is building there in 2019.

Goodyear Mexico has posted a video-animation flyover of the plant, showing both architectural blueprint-style images and artist's renderings of the plant.

Stephen Downer is a Mexico-based freelance writer who covers that country and Latin America for Tire Business, a sister publication of Rubber & Plastics News.