CLERMONT-FERRAND, France—Michelin is moving ahead with plans for a new factory in Mexico, committing $510 million over more than two years for a car and light truck tire plant in León, Guanajuato state.
Michelin said it expects production at the 1.58 million-sq.-ft. structure to start in late 2018, with a capacity initially of 4 million to 5 million tires a year. The expected employment was not disclosed.
Michelin's announcement follows by several months a report by Reuters News Agency that Michelin was planning to build a $510 million factory in central Mexico.
Michelin said the location reflects its “commitment to producing its tires as close as possible to the markets in which they are sold.” The plant's location is with a three-hour drive to the production facilities of 18 large car manufacturers with operations in Mexico.
Leon is a city of 1.2 million inhabitants about 140 miles east of Guadalajara.
Michelin said its decision to build this plant is in response to both to “sharp growth in Mexico's automobile market and to the confidence that the world's largest car manufacturers have put in us.”
“The new plant reflects our ability to take advantage of growth opportunities in the dynamic North American market,” Michelin CEO Jean-Dominique Senard said, “and to make our manufacturing operations more agile by deploying tire ranges that integrate innovative technology.”
Michelin noted most of the high-performance tires to be made at the plant will be for the original equipment segment. These short distances from the plant to OE assembly plants mean that the tires will be delivered to Michelin's customers faster and more cost effectively, thereby reducing the Group's carbon footprint and helping it to meet its environmental objectives,” Michelin said.
The plant will be Michelin's 21st production site in North America and 69th worldwide, including a plant in Queretaro, Mexico, the company opened originally in 1987 and then reopened in 2002 after a 20-month business hiatus.
Michelin North America Inc. recently disclosed that it has invested more than $3.1 billion since 2011 on manufacturing capacity and infrastructure and other developments in support of its sustainable growth strategies. Included in the total was $43 million at the Queretaro plant.
This is the third major tire capacity investment announcement in Mexico in the past 15 months.
Goodyear announced last April it intended to invest up to $550 million in a car and light truck tire plant now under construction near San Luis Potosi, Mexico. The plant's projected capacity is 6 million units a year with 1,000 employees at full capacity.
Pirelli Tyre S.p.A. disclosed in April it is committing $200 million over the coming 18 months to expand its four-year-old car and light truck tire plant in Silao, Mexico, by 50 percent to 7.5 million units.