Tire makers invest $10 billion in expansions, improvements

After easing back on the capital expenditure accelerator in 2014-15, the world's leading tire makers picked up the pace again over the past 12 months, committing nearly $10 billion to new projects and more than $2.5 billion to strategic acquisitions.

As such, the past year represents the highest total of investments/acquisitions that Tire Business, a sister publication of Rubber & Plastics News, has tracked over a 12 month period.

Slightly more than half of the specific investments are earmarked for expansions in Asia, with nearly one-third, or more than $3 billion, budgeted for North America.

The investments announced in the past year include eight new factories.

Combined, the expansion projects announced in the past year represent more than 33 million units of new annual passenger/light truck tire capacity and at least 11.5 million units of new truck/bus tire capacity.

This contrasts with just a handful of plant closings announced in the past year, representing only a few million units of capacity.

Continental A.G. led the spending spree this year with targeted capital expenditure announcements of $2.3 billion. Of that total, $1.9 billion is earmarked for projects in the U.S., including $1.4 billion for the firm's extensive truck/bus tire facility to be built in northern Mississippi.

Conti plans to break ground on the plant in November. Production is slated to start by year-end 2019.

Yokohama Rubber Co. Ltd., China's Ningxia Shenzhou Tire Co. Ltd. and Michelin exceeded the $1 billion threshhold, with Yokohama devoting $1.18 billion alone to its acquisition of off-road tire maker ATC Tires and Michelin budgeting $510 million for a plant in Leon, Mexico.

Bridgestone Corp. ($764 million), Double Coin Holdings ($535 million) and Goodyear ($361.5 million) were others with notable spending numbers.

In terms of capital spending by fiscal year, the largest firms tracked by Tire Business devoted on average 6.6 percent of sales on capital improvements during fiscal 2015, down about a half-percentage point from fiscal 2014.

Individually, India's JK Tyre & Industries Ltd. and Indonesia's P.T. Gajah Tunggal Tbk. stood out, devoting 18.8 and 13.6 percent of sales, respectively, to capital improvements.

Continental, Bridgestone and Michelin spent the most in raw monetary volume, at $2.39 billion, $2.1 billion and $1.98 billion, respectively.

Research and development spending increased for most of the leading companies profiled, pushing the industry average up nearly a full point to 3.5 percent. The averages vary from 0.2 percent for India's MRF Ltd. to 6.2 percent for Continental, although Conti's average is skewed slightly due to its sprawling automotive supply divisions.

Individual expansion projects, by company alphabetically, include:

Bridgestone

• Is investing $164 million through 2018 to expand capacity for passenger tires at its Wilson, N.C., plant by nearly 10 percent to 35,000 units a day, including capacity for run-flat tires. The investment/expansion will not result in any new jobs at the non-union factory, which employs 1,785. Phases I and II will add 167,000 square feet of manufacturing space.

• Is spending $225 million by 2023 to boost capacity nearly 18 percent at its Joliette, Quebec, car and light truck tire facility to 20,000 units a day. The project will result in the plant's product mix shifting to 18- to 22-inch SKUs, from the current 15- to 18-inch mix.

• Has budgeted $250 million through 2019 to strengthen its corporate research and development facilities in Japan. The project will involve consolidating all research offices and laboratories, including biotechnology and raw material development, at its Kodaira City complex in Tokyo, Bridgestone said, as well as relocating radial passenger and light truck tire production out of the Tokyo plant to other Japanese factories.

• Will invest $125 million through 2020 at its Hikone, Japan, plant to redesign its production lines—including a shift toward information technology and automation—by introducing cutting-edge technologies and equipment to “create value through continuous innovations,” it said.

Camso Ltd.

• Spent an undisclosed amount to build a 247,500-sq.-ft. forklift tire plant, which employs 160, in An Uyen Tow, Vietnam.

Cheng Shin Rubber Co. Ltd.

• Has budgeted $400 million to build a factory near Ahmedabad, India to make tires and tubes for two-wheelers, with production expected to begin in early 2017. Cheng Shin is planning a capacity of 20,000 tires and tubes daily.

Continental

• Is devoting $1.4 billion over at least three years to build a truck/bus tire plant in northern Mississippi. The commitment reflects Conti's belief that demand for its commercial tire products in North America will continue to grow at above market pace. Conti has scheduled a groundbreaking for the plant, to be built in Hinds County, west of Jackson, for Nov. 3. The plant's size has not been disclosed, but Conti has indicated it eventually could add capacity for other tire types.

• Is spending $272 million to nearly triple passenger tire capacity at a plant in Hefei, China, to 14 million units per year by 2019. The company will pump additional investment into the plant to raise bicycle tire capacity to 13 million units per year by 2025 from 2 million.

• Has budgeted $56 million to add undisclosed capacity for radial agricultural tires at its Continental Mabor Industria de Pneus S.A. passenger tire plant in Lousada, Portugal. The project will create 125 jobs at the 2.3 million-sq.-ft. plant and underscores Conti's ambitious plans to get back into a tire sector that it exited 12 years ago.

• Invested $50 million to build a 129,000-sq.-ft. High Performance Technology Center at its Korbach, Germany, tire factory, dedicated to producing tires in the 19- to 24-inch rim diameter range and developing advanced manufacturing methods. The unit is expected to turn out 350,000 UHP tires a year at full capacity with 80 employees.

• Is investing $500 million through 2021 to double annual capacity at the 2-year-old Sumter, S.C., tire plant to 8 million passenger and light truck tires. The expansion will create up to 800 jobs and add about 720,000 square feet to the Sumter site.

Cooper Tire & Rubber Co.

• Offered $93 million to buy a 65 percent stake in China's Qingdao Ge Rui Da Rubber Co. Ltd., a company capable of producing 2.5 million to 3 million radial truck tires annually. The deal will allow Cooper to source its Roadmaster radial truck and bus tires from GRT's plant in Pingdu, Qingdao Province. The transaction price covers the acquisition and initial investments in the operation.

DMack Tyres

• Has budgeted $440 million to build a plant in the United Kingdom dedicated to producing competition tires, predominantly for rally sport. The company has not disclosed size or capacity details and stressed the investment figure is preliminary.

Double Coin Holdings

• Is spending $250 million through 2018 to increase capacity 68 percent for low-rolling-resistance radial truck tires at its Double Coin Holdings Jiangsu Tire Co. factory in Rugao, China. The expansion will increase radial truck/bus tire capacity to 4.2 million units annually from 2.5 million units while also enhancing automation.

• Has earmarked $285 million to set up a joint venture in Thailand, with projected annual capacities for 1.5 million truck and bus tires and 50,000 industrial tires. The project involves Double Coin's holding company, Shanghau Huayi (Group) Co. Ltd. and Bangkok-based Tribeca Enterprise Co. Ltd., a subsidiary of Thai rubber company Thai Hua Rubber Public Co. Ltd.

Goodyear

• Is spending $284 million over five years to add 3 million units of annual capacity for passenger tires at its Dalian, China, plant. The project will create 250 jobs when put into full operation, according to Goodyear. The factory's capacity is listed as 10 million car tires and 500,000 truck tires a year, with capacity for an additional 2.08 million passenger tires being installed by year-end 2017.

• Is committing $27.5 million to expand the footprint of its Lawton, Okla., plant by 16,500 square feet to accommodate curing presses for larger-diameter tires. This investment follows expenditures totaling $77.5 million last year to upgrade mixing equipment and replace five older-generation tire-building machines with three automated machines capable of producing tires up to 24 inches in rim diameter.

• Will spend $50 million to increase capacity for high-value-added consumer tires at its Uitenhage, South Africa, factory over the next 16 months, while at the same time relocating capacity for truck tires from that site to plants in Europe/Middle East. Goodyear did not quantify the scale of the capacity increase at the 68-year-old plant, where capacity is listed as 10,000 units a day of passenger, light and medium truck, farm, OTR and industrial tires.

Jamuna Group

• Has started to build on what it claimed will be the first tire factory in Bangladesh. Jamuna is cooperating with the Beijing Research & Design Institute of Rubber Industry on the plant, projected to have annual capacity of 350,000 all-steel heavy truck radial tires, 500,000 semi-steel car radial tires, 400,000 diagonal tires and 750,000 sets of inner tubes and rim bands. The facility is due on stream by 2018.

JK Tyre & Industries

• Spent $33 million to buy a tire and tube plant in Haridwar, India, from Kesoram Industries Ltd., rated at 4.4 million truck and two-wheeler tires per year.

• Has budgeted $10 million to build a research and development center in Mysuru, India, where the firm will consolidate a number of R&D operations from across India. The site will house 200 engineers and scientists initially but will have room for double that number.

Kenda Rubber Industrial Co.

• Has budgeted $160 million to build a car and light truck tire plant in Vietnam's Dong Nai Province capable of producing 10,000 tires a day in the first phase. Kenda expects production to start by the fourth quarter of 2017 with 600 employees initially, ramping up to 1,500 at full capacity.

Michelin

• Is investing $510 million through 2018 to build a 1.6 million-sq.-ft. car and light-truck tire plant in Leon, Mexico, with a projected initial capacity of 4 million to 5 million tires a year with 1,000 employees.

• Is spending an undisclosed amount to add capacity for radial agricultural tires at its facility in Campo Grande, Brazil, to serve what it sees as growing demand in Brazil for the product. No capacity or employment data has been disclosed.

• Is investing $98 million through year-end 2018 to restructure its industrial and service activities in Clermont-Ferrand, France. The plan includes financing new equipment and advanced production processes at the firm's tire plants in Cataroux (racing tires), Gravanches (high-performance car and light truck/van tires) and Combaude (engineering support for other factories) and closing a truck retread factory in Combaude.

• Has budgeted $410 million in Europe to cover a restructuring of tire manufacturing capacity that will result in more than 1,600 job cuts.

The project includes $130 million through 2020 in the United Kingdom, where Michelin will close its truck tire factory in Ballymena, Northern Ireland, and refocus its activity on growth segments of the passenger car and light truck tire and retread markets.

• In Dundee, Scotland, Michelin will invest $106 million to increase passenger and light truck tire production 30 percent by installing machinery capable of making larger diameter tires, which are a growing segment of the market. A new warehouse will be built to accommodate increased production.

• The French tire maker will invest $25 million in its Stoke-on-Trent, England, site, which it said has transformed its retread production facilities over the past few years as part of a new multi-brand strategy. The investment at Stoke and Dundee will create 110 jobs.

• In Italy, which represents 10 percent of Michelin's European production, the firm is implementing a five-year strategic plan that will require $275 million in expenditures to increase car and van tire capacity at its Cuneo plant by 20 percent and truck tire volumes at its Alessandria site by a like amount, while at the same time phasing out retreading.

The company's semi-finished products site, which had dropped production by 45 percent since 2009, will close in late 2016. The restructuring will affect 578 jobs out of 2,800 at the two plants by 2020.

P.T. Multistrada

• Has budgeted $30 million to boost capacity 12.5 percent for car and motorcycle tires at its sole facility in Jakarta, Indonesia, to support rising export demand for its products. The project will boost daily car and motorcycle tire capacity to 32,000 and 18,000 units, respectively. Multistrada—which goes to market under the Achilles and Corsa brand names—cited a recovering European market and a still nascent U.S. market as driving export demand.

Ningxia Shenzhou Tire Co. Ltd.

• Has broken ground on a 5 million unit/year radial truck tire plant at an industrial park near Shizhuisan in Ning-xia Province in north central China. The site is the second phase of a $1.65 billion radial tire expansion project the company initiated in 2013 designed to put 20.1 million units of annual capacity into operation.

Construction on this latest phase is expected to be finished by year-end 2016 and start operations in 2017, the Chinese tire maker said. The plant will create 2,000 jobs, it said, and bring in nearly $950 million in annual production value.

The Shizhuisan-based manufacturer's brands include Inning, Landy and Logo, according to an Internet search.

Pirelli Tyre S.p.A.

• Is investing $200 million to add 2.5 million units of annual capacity at its 4-year-old car and light truck tire plant in Silao, Mexico. The investment will cover construction of a 1.4 million-sq.-ft. factory extension at the Silao complex, where the existing facility's output is slated to grow to 5 million units. The expanded capacity will create 400 jobs.

Qingdao Sentury Tire Co. Ltd.

• Is budgeting several hundred million dollars for a passenger tire plant in the U.S. A site search is underway, with locations in Georgia and Tennessee reportedly the leading candidates. Sentury envisions building a “highly automated smart tire factory” along the lines of its existing plants in China and Thailand, with a target annual capacity of 10 million tires. The company has stated it wants to get the project established by 2017.

Razi Industrial Group

• The Iranian company is spending an undisclosed amount for a tire facility being built in Sanandaj, Kordestan Province, Iran. The project's backers are the Ganji brothers, entrepreneurs involved in two other tire projects in Iran: Artawheel Tire in Ardabil province and Yazd Tire in the central province of Yazd.

Sailun Jinyu Group Co. Ltd.

• Is planning to build a second factory in Vietnam in the next few years, investing up to $200 million in a plant for radial truck and OTR tires—1.2 million truck/bus tires and 30,000 metric tons of OTR tires. Construction of the new site is scheduled to take three years, and the new facilities are expected to generate $250 million revenue when in operation.

Shandong Linglong Tyre Co.

• Plans to spend $271.4 million to upgrade its production capabilities for high-performance passenger radial tires at its factories in Yantai, Shandong. The project will include phasing out 3 million units of annual capacity for bias tires and expanding radial capacities by 8 million units annually.

Speedways Rubber Co. Ltd.

• The Indian company has budgeted $68 million to add capacity for all-terrain vehicle tires at its agricultural/-OTR tire plant in Jalandhar, India, to address what it sees as a growing market, especially in the U.S. The project includes adding 100,000 square feet of space to the Jalandhar factory. Speedways also is evaluating a move into tracks for agricultural vehicles and is modernizing its rubber compounding department at Jalandahar.

Sumitomo Rubber Industries Ltd.

• Is committing $87 million through year-end 2019 to double capacity for passenger car and light truck tires at its Tonawanda, N.Y., factory to 10,000 tires per day. Sumitomo acquired the plant last October from Goodyear as part of the dissolution of its 16-year alliance with Goodyear.

• Is spending $96 million over four years to add capacity for 500 truck tires a day at its 3-year-old plant in Fazenda Rio Grande, Brazil. Production will start by March 2019, along with $54 million to expand car and light truck tire capacity. The company expects the project to create 600 jobs at the plant, which employs 1,217 and produces 15,000 car and light truck tires a day.

• Has budgeted $62 million over two years to install capacity for radial truck and bus tires at its Ladysmith, South Africa, factory to meet growing demand in Africa for the products. The project, scheduled for completion by July 2018, is in addition to $100 million SRI is investing through 2017 to expand overall capacity and upgrade capacity for high-performance tires at the plant. SRI did not say how much truck tire capacity it's installing at the 43-year-old facility.

• Is boosting capacity for car tires by about 9 percent at a site in Thailand's Rayong Province. Daily capacity at the Amati City plant will increase to 85,000 units by year-end and potentially to 100,000 in a few years, depending on demand. The investment was not disclosed.

Tri-Ace Tire Co. Ltd.

• Has budgeted $100 million to build a plant in Taiwan for high-performance passenger tires. The plant is expected to be operating before year-end.

Triangle Group Co. Ltd.

• Is boosting companywide capacity roughly 20 percent to 30 million units annually over the next five years. Included in the growth are plans to achieve smart manufacturing for 10 million units of high-performance tire capacity at its Huayang, China, plant and 3.5 million radial truck tires at its Huamao, China, factory over the next three to five years. No investment sum was disclosed.

• Initiated production in February at its so-called smart factory in Weihai, China, with 4 million units of annual capacity. The plant, which represents an investment of more than $1 billion, touts a manufacturing execution system that keeps record of all manufacturing data from raw materials to shipping, something rarely seen in China's tire plants.

Uzbekistan National Chemical

• Has earmarked $184 million for an industrial complex in Angren, Uzbekistan, that eventually will include plants for tires, conveyor belting and other rubber products. When completed, the project will include a facility capable of producing 3 million steel radial automotive and 200,000 bias agricultural tires, along with 100,000 meters of conveyor belting annually, according to Chinese manufacturer and builder Poly Technologies.

Vee Rubber Co. Ltd.

• Is building a motorcycle and scooter tire plant in Vitthalapur, Gujarat, India, to serve the local market. The scale of the Thailand-based firm's factory and investment were not disclosed.

Yokohama Rubber Co. Ltd.

• Spent $1.18 billion to buy off-road tire maker Alliance Tire Group, expanding Yokohama's OTR tire business measurably and putting the Japanese maker into the agricultural tire sector for the first time. The deal includes Alliance's two factories in India and one in Israel. ATG's sales in fiscal 2015 were $529 million.

• Is spending $33 million to increase capacity for high-performance, larger-rim diameter tires at its plant in Shinshiro, Japan, by 20 percent. The investment will focus on increasing capacity for tires with rim diameters of 18 inches and larger, with initial production to start by June 2017 and be completed by April 2018.

Zhongce Rubber Group

• Is spending an undisclosed sum to add radial truck/bus tire production at the Chinese company's year-old factory in Rayong, Thailand. The capacity is projected to reach 700,000 units this year.