Tire makers slow investments in capital expenditures

A relatively quiet year in global tire industry investment into new capacity ramped up solidly in recent weeks, as large-scale expansion projects disclosed by Bridgestone Americas Inc. and Hankook Tire America Corp. pushed the industry total past the $7 billion level.

These investments—$550 million to boost truck tire capacity at Bridgestone's Morrison, Tenn., factory and $1.6 billion to expand passenger tire capacity and add truck tire capacity at Hankook's Clarksville, Tenn., plant—put investments for the 12-month period through August slightly ahead of those announced in the 2020-21 period, according to Tire Business, a sister publication of Rubber News, research and calculations.

The bulk of the capital expenditures (cap-ex) announced in the past year for capacity expansions and factory upgrades is earmarked for Asia, at $3.5 billion, with nearly 90 percent of that to be invested in China.

China's Sailun Group and Linglong Group top the list of investors for 2021-22 with announced capital expenditures of $2.55 billion and $862 million, respectively, each covering two individual projects.

Regarding the 2021 fiscal year, capital spending among the world's leading tire makers was up double, or even triple digits, over fiscal 2020, according to Tire Business' analysis of the companies financial reporting for the fiscal year.

As a whole, the dozen or so largest tire companies devoted 6.5 percent of their revenue on cap-ex projects during fiscal 2021, up marginally over 2022.

Spending on research and development collectively was at 3.8 percent of revenue last year.

Among the various companies' capacity expansions announced in the past year:

Bridgestone Corp. is planning a $550 million, two-year expansion of capacity at its flagship Warren County truck and bus radial (TBR) tire plant in Morrison, Tenn.

The expansion, which will boost employment at the 32-year-old plant to nearly 1,400, is designed to increase capacity and accelerate the use of advanced technologies "that support cleaner, safer and more efficient commercial truck and bus fleets."

The investment will raise daily capacity at the plant nearly a third to over 12,000 units, Bridgestone said. The factory's floor space will grow by 850,000 square feet to over 2.8 million square feet.

Bridgestone Americas is planning to build a vehicle dynamics test track in Akron on a 100-acre tract of land adjacent to the race tire factory it opened earlier this summer near its North American technical center in south Akron. The facility will support ongoing research and play an "indispensable role" in the tire development work taking place in Akron across the firm's various research, development and testing departments. The projected investment was not disclosed.

In Japan, Bridgestone is planning to increase capacity for premium motorcycle tires at its plant in Nasu, in a $12.5 million, four-year investment project. The project will ramp up capacity at the 60-year-old factory with an additional 90,000 "premium" Battlax-branded motorcycle tires per year by 2026.

 

CEAT Kelani Tyres of Sri Lanka has budgeted $42.8 million to boost capacity in car, SUV and motorcycle tire production at its factory in Kelaniya, Sri Lanka. The joint-venture tire maker expects to boost capacity for steel-belted radials for cars, SUVs and light vans to 61,000 units a month from 51,000. Motorcycle tire capacity will be increased to 57,000 from the current 41,000 units.

 

Goodyear plans to invest $160 million over five years to modernize its 62-year-old tire plant in Amiens, France, in order to accommodate production of larger-rim-diameter tires and enhance automation.

The project is one of several modernization and expansion projects the company is expected to announce this year.

The French government is supporting the project with $48.5 million in state aid through its Automotive Recovery Plan. Employment at the Amiens plant stands at about 800 workers, and the plan would preserve employment for at least the next 10 years, including an "ambitious" skills development training program, Goodyear said.

 

China's Guizhou Tyre Co. Ltd. is planning to raise its annual capacity for solid tires at a plant in Guiyang City by about a third, according to an environmental impact assessment report. The company, which goes to market under the Advance and Samson brands, will invest about $3.7 million into the expansion, which was expected to be in operation by mid-2022.

 

Hankook Tire & Technology Co. Ltd.'s board of directors approved a $1.6 billion expansion of the 6-year-old plant in Clarksville, Tenn., that eventually will double capacity for passenger and light truck tires to 11 million units a year and establish capacity for 1 million radial truck/bus tires.

The expansions will create 1,200 new jobs in the Clarksville region, Hankook said, pushing employment in the region to over 2,100.

Hankook plans to break ground on the expansion in early 2023, subject to definitive agreements, regulatory approvals and other conditions. Production of both Phase II and III is scheduled to begin by the fourth quarter of 2024 and reach full capacity by early 2026.

 

China's Linglong Group Co. Ltd. is planning to expand truck and bus tire production capacity at a factory in Dezhou, Shandong, by 60 percent, with a $62 million investment over the coming 12 months.

The expansion, to be housed in 2.2 million square feet of new manufacturing space, will create up to 284 jobs. The expansion will add up to 1.2 million units of new radial truck/bus tire capacity at the factory, where Linglong phased out bias-ply truck tire capacity a year ago. The site in Dezhou has nameplate capacities of 10 million passenger and 2 million truck/bus tires per year.

Linglong also has approved funding for a passenger and truck/bus tire plant in Hefei, Anhui Province, that will become the company's seventh tire factory in China when it starts production.

The new plant, for which Linglong has budgeted $800 million, is projected to have capacities of 12 million passenger and 2.6 million truck/bus tires a year when it reaches full capacity by 2027, Linglong said. Groundbreaking on the 8.6-million-sq.-ft. factory is expected before year-end.

 

Nokian Tyres P.L.C. is stepping up plans to build a second factory in Europe to replace the capacity at its 16-year-old plant in Russia, which Nokian plans to divest due to the political and industrial fallout of Russia's invasion of Ukraine.

To expedite the decision, management is cutting the dividend payment this year completely and will re-allocate the $117 million it would have paid out toward the construction of a new plant in Europe.

 

Turkey's Özka Lastik ve Kauçuk increased its capacity for agricultural tires—predominantly radial construction—by 55 percent at its factory in Kocaeli, Turkey. Capacity is expected to increase an additional 14 percent in 2022.

Özka's expansion coincided with an announcement by Titan International that it had secured an off-take production contracted with an unidentified Turkish tire company to produce Goodyear-branded radial farm tires for it for sale throughout Europe.

Özka Lastik did not disclose its investment in the expansion.

 

Pirelli & C. S.p.A. has a handful of expansion projects in the works at its operations in Argentina and Mexico.

In Argentina, Pirelli added motorcycle tire production capacity at its 60-year-old plant in Merlo, becoming the first local manufacturer of this segment in the country. Pirelli is investing $10 million in the plant, about half of that earmarked for the motorcycle tire capacity.

The expansion project is in line with Pirelli's industrial plan unveiled in 2021, calling for production of two-wheeler tires to grow to 450,000 units per year.

In Mexico, Pirelli budgeted $36 million to boost capacity at its manufacturing complex in Silao, Mexico, by 9 percent to more than 7.2 million units annually.

At the same time, the company disclosed plans to build a technology and digitalization hub for production at the Silao plant in a bid to implement Industry 4.0 principles and strengthen the "innovation ecosystem" at the nine-year-old facility.

Pirelli has budgeted $15 million for the project, which will be housed in a 71,900-sq.-ft. expansion of the factory premises.

The heart of the new investment will be the creation of Pirelli's first research and development center in Mexico, which will incorporate cutting-edge technologies for the production of tires designed for future mobility.

Qingdao Sentury Tire Co. has earmarked a budget of $590 million for a passenger and light truck tire plant in Galicia, northwest Spain, as part of its major global growth strategy.

Sentury, which goes to market with the Delinte, Groundspeed, Landsail and Sentury brands, is considered the world's No. 39 tire maker, based on fiscal 2021 sales of $811 million.

The plant, with a rated capacity of 12 million high-performance radial tires a year, is scheduled to be completed in two phases over a 36-month period.

The first phase, expected to be completed by early 2024 will have a production capacity of 6 million units, Sentury said. The second phase, to double the capacity to 12 million units, should be completed by 2025.

 

Sailun Group Co. Ltd. has unveiled plans for a pair of major industrial investments in China—to establish a "functional new materials" group designed to improve the efficiency of tire production within the group and to build a passenger, truck and OTR tire plant in Shandong Province in a five-phase project valued at $2.25 billion.

The project is expected to take up to five years to complete, Sailun said in a recent filing with the Shanghai Stock Exchange. Once fully on-stream, the factory will be rated at 20 million high-performance passenger tires, 10 million all-steel radial truck tires and 150,000 metric tons of OTR tires.

Sailun said it expects to break ground in the fourth quarter on the project, located in Dongjiakou, a coastal port town about 25 miles south of Qingdao.

The plant will be Sailun's third in China and fifth overall. Its other plants in China are in Shenyang/Liaoning and Dongying/Shandong; its overseas plants are in Phuoc Dong, Vietnam, and Svay Rieng, Cambodia, the latter of which opened in November 2021.

The plans for a "functional new materials" group involve the company's "liquid gold" liquid-phase rubber-mixing process, already being used at the firm's plant in Cambodia.

Sailun has earmarked $345 million for the project, also to be sited at the Dongjiakou factory. It will have a rated annual capacity of 500,000 metric tons of functional new materials once fully on stream.

 

Zhongce Rubber Group (ZC Rubber), China's largest tire maker and No. 8 worldwide, strengthened its off-highway tire business by acquiring Tianjin United Tire & Rubber International Co (TUTRIC) as part of its global expansion strategy.

Based in port city of Tianjin, in northeastern China, TUTRIC manufactures the Tianli tire brand and will be integrated as Zhongce Rubber (Tianjin) Co. Ltd., upon completion of the acquisition, ZC Rubber said.

The deal is valued at $200 million, and ZC Rubber said it plans to invest more than $100 million in TUTRIC's facilities over the coming five years, in a bid to boost the business' annual revenue sevenfold to $700 million.

Claiming to be "one of the largest suppliers of off-road (OTR) tires in the world," Hangzhou-based ZC Rubber offers a range of products for wheeled loaders, articulated and rigid dump trucks, port applications, underground mines, as well as industrial and forklift operations.

ZC Rubber also relocated truck tire production at its factory in Jiande City, Zhejiang Province, to another facility located nearby. The move move was made at the request of the government and is part of the municipal replanning that envisages a new commercial purpose for the site.