SPARTANBURG, S.C.—Trelleborg Wheel Systems cut the ribbon Jan. 27 on its first North American tire manufacturing plant, touting its expanding commitment to the North American market.
The 430,000-sq.-ft. facility in Spartanburg will produce radial agricultural tires, eventually in sizes ranging from 24- to 54-inch rim diameters, for both the original equipment and replacement markets.
Trelleborg is investing more than $50 million in the multi-phase project that converted a former Trelleborg A.B. coated fabrics facility to tire production.
The company started producing tires at the site late last year, and it said it will continue to add tire building equipment over the next couple of years. The factory is expected to employ 150 by 2018.
“The Spartanburg facility is one of the most automated manufacturing facilities in the agricultural industry. This enables us to guarantee the highest standard of production to customers across the North American market, which we are confident will allow us to replicate the phenomenal ramp-up of our Xingtai facility in China,” said Paolo Pompei, president of agricultural and forestry tires at Trelleborg Wheel Systems.
“North America is the largest agricultural market in the world and it is highly attractive for us. Demand for extra-large agricultural tires, where Trelleborg is a market leader, is growing in the region. Although we already sell our products in the U.S. and Canada, local production offers considerably more favorable conditions, thus enhancing our competitiveness,” he said.
“We are now located in a modern facility in a prime location with state-of-the-art equipment designed according to the latest Trelleborg technology standards.”
The plant features what Trelleborg claims to be the widest innerliner calender in the ag tire industry; fully automated body plies cutter; a fully robotized line for textile belts; and fully automated curing presses.
The U.S. represents the largest single market for Trelleborg A.B., where it reported corporate-wide sales in 2014 of about $730 million.
Trelleborg Wheel's North American sales are estimated at about $175 million.
There are three main reasons the Swedish company set its sights on establishing a tire plant in the U.S. market, according to Pompei:
c The U.S. is the biggest agricultural market in the world;
c Freight costs and import duties have increased, by up to 15 percent and as much as 100 percent respectively, along with currency fluctuations of as much as 24 percent; and
c North America is a market where radialization is growing year after year.
Currently radial usage is at about 48 percent—providing space to improve the productivity of Trelleborg's customers.
He noted the growing costs of importing tires into the U.S. market can be a business killer.
“This is why we don't believe in a strategy where we produce tires in one part of the world, and we ship tires around the world. We don't believe this is going to be sustainable,” he told those gathered for the grand opening.
“This investment shows the clear commitment of Trelleborg to the expansion of our activities here in the region,” said Ulf Berghult, CFO of Trelleborg A.B.
He said the plant “creates a growth platform for us in the U.S.” With the firm's base in North America and its recent acquisition of Standard Tyres Group, a Brazil-based industrial tire manufacturer, this strengthens its market share in South America.
“Trelleborg is becoming a global force in the field of agriculture tires,” he said. “Later this year, this will become even more obvious as the merger with the Czech company CGS becomes effective.”
Trelleborg is awaiting government approval of its $1.25 billion bid to acquire CGS Holding a.s., the parent firm of Mitas a.s., which opened an ag tire plant in Charles City, Iowa, in 2012. Merger of the firms would almost double the annual revenue of Trelleborg Wheel Systems.