Sumitomo to invest $87 million to upgrade N.Y. plant

TONAWANDA, N.Y.—Sumitomo Rubber Industries Inc. plans to significantly upgrade the company's Tonawanda tire manufacturing facility, where it also will expand capacity two-fold and add new machinery.

It will invest about $87 million in the project, according to Tim Noe, senior vice president of manufacturing. The target date for completing the entire project is slated for the latter part of 2019.

Over the next three years, capacity at the factory will be expanded to 10,000 passenger and light truck radial tires per day from the present 5,000. The firm's aim is to expand overall sales and improve its logistics in North America by increasing the proportion of locally produced tires, it said.

Sumitomo's plant in Tonawanda, located near Buffalo, spans about 2 million square feet, Noe said, and while all the necessary equipment needed for the expansion has been identified, “the review of the footprint continues to be under evaluation. We expect that no major building projects will be required at this time.” However, some minor extensions may be required, he indicated.

More than 1,200 are employed at the plant, many represented by United Steelworkers Local 135L, but that number could change once the Japan-based tire maker upgrades the complex and begins increasing capacity.

“It's great news for us,” said Thomas O'Shei, president of the USW local. “Sumitomo has given us a lot of support. Now we have an opportunity to be here for the next 50 years.” He said much of the new technology at the plant will be upstream, and the new machinery will be top-of-the-line.

Sumitomo's 93-year-old Tonawanda plant, acquired as part of the dissolution of a 16-year joint venture with Goodyear in October 2015, has added about 130 jobs—30 hourly and 100 salaried positions—since the companies parted ways.

“Any additional staffing needs will be evaluated at the appropriate time,” Noe said.

One of the primary objectives of the facility upgrade and capacity expansion, he said, is to improve productivity, cost and competitiveness of the plant.

“The expectation is that this volume increase and investment will enable the factory to better utilize existing capacity in many areas,” he said. “The successful execution of this investment project should go a long way toward securing the future for the 1,200-plus people currently employed at the site.”

Noe noted the factory produces commercial truck and bus tires as well as motorcycle bias and radial tires for the North American market. The increased capacity is for passenger car and light truck radial tires.

“Sumitomo has been selling Falken and Sumitomo branded tires in the U.S. for many years,” he said. “Sumitomo has long desired to increase its presence in this market. However, it was unable to do so because of the restrictions in the joint venture agreement with Goodyear. The dissolution of the joint venture ... enabled Sumitomo to establish a manufacturing footprint in North America, resulting in reduced supply chain lead times and improved customer service.”

He said the North American tire market for original equipment and replacement tires represents about 400 million tires sold per year, and the company believes it will continue to grow in the foreseeable future.

“With the dissolution of the joint venture global alliance with Goodyear, Sumitomo has gained the rights to use the Dunlop brand for motorcycle tires as well as OE tires for sale to Japanese auto makers,” Noe said.

Meanwhile, he noted the company is working to increase recognition for its Falken brand through sports marketing, sponsoring Major League Baseball, as well as through expanding sales of Falken OE tires. The firm will continue to enhance its product lineup by releasing competitive offerings in each category of its line, Noe said.

While the expansion project has no defined phases, the timeline is straightforward, Noe said. New equipment orders will be made this year and early next year, and the company will prepare a footprint for new machines, he said.

“Some existing equipment will be removed and other (machinery) will be relocated,” he said. All the required infrastructure changes will be made, and new machinery will arrive, then installed.

Once that is complete, equipment start-ups and training will take place. All the steps will be aligned to meet the 2019 target date, Noe said.

He said the new machinery is central to the project. “Some of the new equipment is simply to support the volume increase. Equally important is that some of the new equipment will expand the technological capability of the Buffalo facility to design and produce high performance passenger car, SUV and light truck tires.”

In addition, he said, some machinery will improve efficiency within certain processes. Noe said while there is a strong focus on the expansion project, the company has other projects underway. “First and foremost was an upgrade to the facility's IT infrastructure, along with office renovations to support the transfer of all business functions to the Buffalo site.

“These projects were necessitated by the dissolution of the joint venture, as well as the need to align and integrate all business processes with Sumitomo's systems,” he said.

Another project involves expanding the capacity and capability of the plant's raw materials laboratory to enhance the testing and design of materials to support new products designed specifically for the North American market, according to Noe.

That project serves as the first step toward establishing a research and development operation at the site, he said.