Conti picks Thailand for facility

RAYONG, Thailand—Continental A.G. has chosen a site in Rayong to construct a car and light truck tire manufacturing plant.

The operation is projected to be operational by 2019. Continental plans to break ground later this year and has budgeted about $265 million for phase one, which will employ about 900 once complete. Conti expects the first phase to be complete by 2022 with production reaching 4 million tires per year at that time.

The firm has enough space to increase production to 25 million tires annually if needed. A company spokesman said via email that the firm would execute this in five additional phases, each requiring an additional investment of about $214 million.

The spokesman said that the new plant will further balance its manufacturing footprint in Asia-Pacific. This will be Conti's sixth plant in the region, with others in Hefei, China; Alor Setar and Petaling Jaya, Malaysia; Modipuram, India; and Kalutara, Sri Lanka.

Rayong was chosen because of its short distance to Bangkok, size of the site and its close proximity to the technical university, the spokesman said. Rayong also is about 35 miles from the deep-sea port in Laem Chabang. Continental added that the Thai government and other local institutions were very supportive partners during the selection process.

"This plant will strongly support our planned business growth in both original equipment and replacement business for passenger and light truck tires and further establish our customer relations in both segments," Philipp von Hirschheydt, head of Conti's APAC passenger/light truck tire business unit, said in a statement.

"We want to benefit from the growth potential in this region in the replacement market and are confident that our local production will also enable a closer cooperation with new customers to further extend our position in these markets."

The plant will serve both the local market and the Asia-Pacific region's original equipment manufacturers and replacement market. The spokesman said Continental sees attractive potential for its brand portfolio in both market segments.

Continental has invested more than $3 billion since 2010 to expand production and research development around the globe as part of its Vision 2025 initiative. During that span, the firm has established five greenfield tire plants—in Timisoara, Romania; Camacari, Brazil; Hefei, China; Kaluga; and Sumter, S.C. It also is in the process of building another U.S. facility in Clinton, Miss.

When Vision 2025 began, about 75 percent of its tire sales were concentrated in the Europe/Middle East/Africa region. With the addition of these global facilities, EMEA now accounts for less than 65 percent of the Tire Division's overall sales.

The ultimate goal is to reduce that figure to 50 percent by 2025.

"One important pillar of our long-term strategy is to operate with an agile and flexible set-up that enables us to react fast to the market requirements, establish further production capacities in the growth region and to strongly support our Asia-Pacific growth plans with high-tech production capabilities," Nikolai Setzer, member of Conti's executive board in charge of corporate purchasing and the Tire Division, said in a statement.