BOSTON—Goodyear is budgeting nearly $800 million through 2019 to boost production capacity for high-value-added tires—essentially those with rim diameters of 17 inches and greater—in a bid to stay ahead of the demand curve for such tires.
Goodyear disclosed the expansion projects—at plants in the U.S., Mexico, South Africa, China and India—during its recent briefing with financial analysts in Boston.
Goodyear projects demand for HVA passenger tires will double worldwide by 2020 to 444 million units. This growth follows a doubling in demand from 2015-20 to 222 million units, according to Laura Thompson, executive vice president and CFO.
Thompson also noted that the industry margins on 17-inch and larger tires is $16 per tire higher than on tires smaller than 17 inches. Taken together, Goodyear's expansions will result in 20 million units of additional annual capacity for the larger-rim tires, Thompson said.
Specific projects outlined include:
- $125 million through 2018 to add 2 million units of annual capacity at Lawton, Okla., and Fayetteville, N.C. Goodyear declined to provide a breakdown between the two plants. The added capacity is targeted at original equipment customers.
- $210 million through 2019 to increase capacity at Pulandian, China, by 3 million units a year;
- $115 million to add 1 million units of HVA capacity at Aurangabad, India.
- $290 million to $300 million through 2019 to install 6 million units of annual capacity at San Luis Potosi, Mexico.
- $20 million in 2017 to add 1 million units at Uitenhage, South Africa; this spending is part of a $50 million investment disclosed in September 2015.
In addition, Goodyear added 3 million units of annual capacity for the larger-rim tires at plants in Europe in projects wrapping up in 2016.