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: