AKRON—Goodyear has broken ground on an expansion of its tire factory in Pulandian, Dalian, China, to boost production of premium, larger diameter tires.
Cost of the project, which the company plans to complete in 2020, was estimated at about $485 million by the tire maker. Additional machinery also will be added at the facility, a spokesman said.
He said the Pulandian plant will be expanded by about 610,000 square feet. The tire facility presently stands at almost 8.4 million square feet, he said.
When completed, the expansion will increase the factory's capacity by about 5 million tires a year, the spokesman said. It presently makes about 31,000 units a day.
He said the new capacity will enable the company to meet the strong and growing market demand for premium, large-rim-diameter consumer tires in China and across the Asia-Pacific region.
At this point the number of new jobs expected to be created by the expansion had not been released, according to the spokesman. The Akron-headquartered firm employs about 1,900 at the facility.
Goodyear said that by 2020, it expects tires with rim diameters of 17 inches or greater to account for nearly 60 percent of its replacement tire sales in China.
The investment in the Pulandian plant “speaks to our long-term strategy of pursuing sustainable growth in the Asia-Pacific region and increasing Goodyear's presence in high value segments of the global tire market that are growing at rates above the total industry where we can capture the value of our brand,” CEO and President Richard J. Kramer said in a statement.
Chris Delaney, president of the company's Asia-Pacific operation, said in the statement that the investment will strengthen the tire maker's presence in China. “As one of the most important and key growth markets, our global brand and innovative product portfolio in China will give us a competitive edge.”
Goodyear said it was the first global tire manufacturer to enter China when it built a tire production factory in Dalian in 1994.
It moved production to the Pulandian facility in 2012 and opened a China Development Center near the site in 2015 to increase the speed and efficiency of developing premium tires for China-based auto manufacturers, the company said.
Goodyear's expansion in China ties in with its global strategy to focus on premium, larger diameter tires. It's also the reason the firm gave in October when it said it is planning to close its 49-year-old car and light truck tire plant in Philippsburg, Germany, by the end of 2017.
Its decision will impact 890 employees.
Goodyear is looking to increase its presence in high value segments of the market “that are growing at rates above the total industry where we can capture the value of our brand and help our customers grow profitably,” according to Jean-Claude Kihn, president of the firm's Europe, Middle East and Africa region.
He said the company's customers want more premium tires with large rim diameters 17 inches and above. The tires are in high demand by original equipment customers and will be needed in the replacement market in the future, he added.
Goodyear, which recorded a 17 percent net income increase to $317 million on a 9.5 percent drop in sales of $3.8 billion in the third quarter, told financial analysts recently that it is budgeting nearly $800 million through 2019 to boost production capacity for high value added tires.