BKT suspends plan for U.S. factory

MAHARASHTRA, India—Off-highway tire manufacturer Balkrishna Industries Ltd. is suspending its plans for a U.S. tire factory, citing business uncertainties related to difficult macroeconomics and volatile climate conditions.

BKT disclosed plans in October to build a $100 million plant in the U.S., when Arvind Poddar, BKT's chairman and managing director mentioned the move during his Hall of Fame acceptance speech at the Tire Industry Association awards ceremony in Las Vegas. The investment, BKT said, would help it accelerate its business with North American equipment makers by being able to offer faster deliveries as well as enable it to export to neighboring countries "in a more competitive manner."

The Maharashtra-based tire maker's decision to put its expansion plans "in abeyance" were disclosed in a first-quarter fiscal 2020 financial document. The company did not elaborate on the statement.

The factory would be BKT's first outside of India and its fifth tire plant overall. BKT is India's fifth largest tire maker and No. 39 worldwide, based on fiscal 2017-18 sales of $692 million.

The projected U.S. plant was slated to open in the first half of 2021 with a nameplate capacity of 20,000 metric tons per year. That's smaller than any of the company's four plants in India. By comparison, the company's newest factory, in Bhuj, Gujarat, is rated at 130,000 tons per year.

For the quarter ended June 30, BKT reported a 27.9 percent drop in pre-tax operating (EBIT) income on 13.9 percent lower sales.

This is the third U.S. plant project involving foreign investors to be suspended.

Most recently, it was revealed that Qingdao Sentury Tire Co. Ltd. had put on hold indefinitely plans to build a car and light truck tire plant in the U.S., according to various sources close to the project.

The company, which sells tires under the Delinte, Groundspeed, Landsail and Sentury brand names, disclosed plans in September 2016 to invest $530 million to build a plant in Troup County, Ga. It would have been capable of producing 12 million car and light truck tires a year at full capacity and would create up to 1,000 jobs.

In June 2018, Guangzhou Vanlead Group Co. Ltd. was forced to put on hold indefinitely plans it had announced in 2017 to invest $1 billion in a tire plant in South Carolina.

Guangzhou Vanlead, a China state-owned entity that controls Wanli Tire Group, had proposed building a tire plant in Orangeburg County, S.C., capable of producing 6 million consumer tires annually in the eight-year project's first phase.