SILAO, Mexico—Pirelli C. & S.p.A. plans to strengthen its position throughout North America with a major investment in Mexico that will expand its operation significantly and create a large production hub.
It will add another manufacturing facility along with a warehouse adjacent to its present tire plant in Silao in the next year, additions that will allow it to boost its tire manufacturing capacity in the next two years.
Pirelli, globally headquartered in Milan, Italy, intends to invest about $200 million over the next three years in the expansion project.
That will bring the firm's total investment in the Mexican operation to more than $600 million by the end of 2018—$360 million invested since 2012, when it built the present Silao facility, and $50 million already earmarked for 2016 and 2017, along with the $200 million, according to a company spokeswoman.
She said the new factory will span about 516,667 square feet; the warehouse will be approximately 96,875 square feet.
Pirelli will begin work on the new state-of-the-art facility in the next few weeks, she said, and the company is hoping to begin producing tires at the complex in the second or third quarter of 2017. The firm noted that the plant will feature highly advanced technologies and processes.
It selected the location for its newest tire plant and warehouse because “we had originally purchased a large site in Silao so that we could expand there if the North American market showed promise,” the spokeswoman said. The production hub covers 140,000 square meters, or about 35 acres.
Pirelli's newest investment likely will create an additional 400 jobs at the two-plant complex, the company said, with its work force at the Silao production hub growing to more than 1,800 employees.
Annual output, which at the end of 2015 was around 3 million tires, will climb another 2 million tires at the conclusion of the initial phases of the project, the firm said.
By the end of 2018, when the expansion project is expected to be finished, total production capacity is expected to reach 7.5 million tires annually.
Tires produced at the facility primarily will be for the U.S., Canada and Mexico. The investment, the spokeswoman said, is in line with the firm's local-for-local strategy.
Pirelli's current Silao plant, built in 2012, has focused on the premium tire segment, with production centered on high performance and ultra high performance tires for cars and SUVs. It primarily produces its products for the NAFTA region.
In 2015, the firm maintained, premium tire sales in the region grew by 24.3 percent and accounted for 90 percent of the total at the local level.
It said the production hub is distinguished by its high standards in terms of processes and products, as well as its environmental sustainability and technical training. Its decision to continue investing heavily in the Silao hub demonstrates the importance of Mexico among the company's international operations, the tire maker said.
Pirelli, which has a presence in more than 160 countries, has been building a strong operation in the NAFTA region since 2002 when it built a plant in Rome, Ga., that also serves as its North American headquarters. The U.S. factory primarily produces high-end tires.