AKRON—The world's leading tire makers committed more than $7.3 billion in the past year toward new plants and capacity expansions, a measurable drop from record spending of $10 billion-plus in 2015-16 but still ahead of the annualized average for the past decade.
The investment sum was buoyed by nearly $3.3 billion in spending on acquisitions, deals that involved companies with collective annual sales of more than $2.5 billion—including Qingdao Doublestar Tire Co. Ltd.'s still-pending $830 million bid to buy what amounts to a controlling interest in South Korea's Kumho Tire Co. Inc.
The expansion projects collectively represent more than 80 million units of new passenger and light truck tire capacity and 7 million units of truck, bus and OTR tires per year.
This is balanced by only a couple of plant closures of note—Goodyear's car and light truck tire factory in Philippsburg, Germany (6 million units per year), and Giti Tire Group's truck tire factory in Chongqing, China (1.5 million units/year).
Among the investment announcements of the past year are eight new tire plant projects, including three in the U.S.—Nokian Tyres P.L.C.'s in Dayton, Tenn.; Qingdao Sentury Tire Co. Ltd.'s in LaGrange, Ga.; and Wanli Tire Group's in South Carolina.
Slightly more than half of the specific investments are earmarked for expansions in Asia, with a third, or nearly $2.5 billion, budgeted for North America.
Wanli Group's $1 billion in declared investments—for the projected U.S. plant in South Carolina—qualifies as the top capital spending for the 2016-17 period.