TOKYO—Japanese conglomerate Mitsubishi Corp. and Toyo Tire & Rubber Co. Ltd. have established a wide-ranging strategic partnership that will enhance Toyo's global distribution assets, help it compete more effectively in the evolving mobility sector and fund capacity expansions.
As part of the partnership, Tokyo-based Mitsubishi—which has partnered with Toyo in distribution since 1974—raised its ownership stake in Toyo to 20 percent from 3.05 percent with a $452.5 million investment for the purchase of 26.9 million newly issued shares.
The move, Toyo said, comes in response to "intense competition within the tire industry and drastic environmental changes globally." Toyo called Mitsubishi a "vital partner" in the drive to expand the Toyo brand, and said it expects to collaborate on a medium- and long-term business model that will create additional value.
"We will use the capital raised…to meet the future challenges of a mobile society by investing in our global operations," Toyo added.
Among the new concrete initiatives Toyo outlined for the capital infusion was a $62 million investment to expand truck and bus tire capacities at plants in China and Malaysia. It also plans to spend $293 million for new production facilities at sites yet to be disclosed, rated at up to 4 million tires a year.
Toyo also will use $53 million and $89 million to support ongoing expansions at plants in White, Ga., and Perak, Malaysia, respectively.
The Japanese tire maker, which is set to change its corporate name to "Toyo Tire Corp." in 2019, said the move is part of its new corporate philosophy which aims to "create excitement and surprise with our products that exceed customer expectations and enriches society."
Mitsubishi, already a partner with Toyo in sales joint ventures in Australia, Canada, China and Europe (including Russia), intends to set up joint task forces with Toyo in Japan, China, Europe, Middle East, Africa and Asia to develop sales channels, enhance marketing capabilities and reinforce logistics and other operations.
Toyo already has begun incorporating Mitsubishi marketing and corporate personnel at its headquarters and sales companies in Japan and internationally.
Other key targets of the partnership include enhancing Toyo's technological capabilities and reinforcing its resources.
On the technological front, the partners will work with outside third parties on a range of collaborative initiatives, including:
- research into "next-generation materials" such as elastomers with new performance features and renewable materials,
- advanced development of production technologies, such as vulcanization and rubber kneading equipment, and
- the application of artificial intelligence/Internet of Things (AI/IoT) technologies in factory automation and tire design.
In its statement on the matter, Mitsubishi noted that the mobility sector is undergoing a "once-in-a-century" transformation that includes the electrification of vehicle drivetrains and automated driving technologies. This transformation has far-reaching implications for the tire industry in terms of product design and manufacturing as well as sales and distribution.
Mitsubishi said it has a "wide array of touching points" with various industries in the mobility sector that it can leverage to help Toyo meet the needs of the digital age.
Toyo did not say how—if at all—this might affect a technology cooperation agreement it signed with Bridgestone Corp. in 2008.
That agreement called for the companies to work together in five key business areas, such as joint development of advanced production methods, joint purchasing of raw materials and equipment and producing tires for each other at selected plants, including Toyo's U.S. factory and Bridgestone's plants in Latin America.
The companies at that time acquired minority shares in each other. The issuance of new shares to effect the Mitsubishi deal reduced Bridgestone's holding in Toyo to 6.48 percent from 7.86 percent.
Shahrzad Pourriahi, a reporter with European Rubber Journal, contributed to this article.