LEON, Mexico—Michelin is preparing to capitalize on Mexico's growing automotive market.
The firm said it is committing $510 million to construct a 1.53 million-sq.-ft. manufacturing facility for high performance car and light truck tires in Leon. A company spokeswoman said the move is projected to create more than 1,000 jobs.
Construction is scheduled to begin in the second half of 2016, Michelin said. The plant will have an initial capacity of 4 million to 5 million tires per year when it begins production in late 2018 and then be ramped up gradually from there.
The spokeswoman said Michelin executives would not be made available for further comment. The firm did not disclose whether or not it received government incentives to build the plant.
“Michelin is building this plant to respond both to sharp growth in Mexico's automobile market and to the confidence that the world's largest car manufacturers have put in us,” Michelin CEO Jean-Dominique Senard said in a July 4 news release. “The largest investment approved by the group in 2016, the new plant reflects our ability to take advantage of growth opportunities in the dynamic North American market and to make our manufacturing operations more agile by deploying tire ranges that integrate innovative technology.”
Leon was chosen because of its close proximity to other major original equipment manufacturers in the country. The firm said 18 large car manufacturing operations were within a three-hour drive of the new plant's site, which is located about 140 miles east of Guadalajara. The spokeswoman added that there is a strong, ready work force in the Leon region.
Michelin said most of the tires produced at the plant will be made for the OE segment and that the location will allow the company to serve its customers in a quick and cost-effective manner.
Once complete, the Leon facility will be Michelin's 21st site in North America and 69th total. The firm operates a second facility in Queretaro, Mexico, which also produces car and light truck tires.
Michelin North America Inc.—Michelin's North American operational arm—recently said it has invested about $43 million at Queretaro for manufacturing capacity, infrastructure and other improvements to support its sustainable growth strategy since 2011.
“We're pleased to strengthen our industrial presence in Mexico, thereby being able to satisfy the needs of North American car manufacturers and motorists looking for high-quality tires that are perfectly adapted to their usage conditions,” Michelin Mexico Director Mike Boggs said in a statement.
The firm's new plant is one of many recent tire-related investments in the Mexico region.
Goodyear recently selected San Luis Potosi, Mexico—which is about 112 miles west of Leon—as the site for its $550 million high performance car and light truck tire plant in April 2015.
Goodyear said at the time its factory is projected to begin production in mid-2017 and that it will be the firm's most technologically advanced with a capacity of about 6 million tires per year. The company is projected to create about 1,000 jobs when it opens in mid-2017.
Pirelli Tyre S.p.A. said in April that it is committing $200 million over the next 18 months to expand its car and light truck tire plant in Silao, Mexico, by 50 percent to 7.5 million units. Production is expected to begin in mid-2017 and is expected to add about 400 jobs, bringing total employment to 1,800.
The investment boom on the tire side is likely in response to Mexico's ever-growing OEM presence. Ford, General Motors, Fiat-Chrysler, Honda, Nissan, Toyota, Mazda, Kia, BMW, Mercedes-Benz and Volkswagen are either already operating or preparing to open assembly plants in the country.
In the last year, Toyota revealed plans for a $1 billion new assembly plant and Ford is investing $2.5 billion to expand two new facilities. Automotive News reported that Ford will relocate production from Michigan to a new site in Mexico over the next few years.
Karan Chechi, research director at TechSci Research—a global market research and consulting company that operates in a number of industries, including automotive—said at the time of Goodyear's decision that TechSci pro-jects annual vehicle production in Mexico to reach 5 million units by 2020. The country surpassed 3 million vehicles in 2014, which was a new milestone.
Automotive News and European Rubber Journal, sister publications to Rubber & Plastics News, contributed to this report.