AKRON—Capital spending on new capacities by the world's leading tire makers fell measurably in the past dozen months to roughly $3.5 billion, but the total includes plans for seven greenfield factories.
At the same time, at least two high-profile projects representing about $630 million in capital spending—Balkrishna Industries Ltd.'s and Sentury Tire Group's in the U.S.—are now on indefinite hold.
New U.S. plants from Continental A.G. and Nokian Tyres P.L.C.—representing investments of $1.85 million and more than 4 million units of new annual capacity—are scheduled to hold ceremonial production commissioning in the coming months.
The new investment sum tracked by Tire Business, a sister publication of Rubber & Plastics News, during the past year is less than half that announced in the 2017-18 time frame and the lowest since 2008-09.
The total increases to nearly $4 billion if one includes the $545 million Michelin spent to acquire Indonesian tire maker P.T. Multistrada Arah Sarana and the $47 million Titan International spent to buy out one of its two minority partners in the Russian tire maker Voltyre-Prom.
The new plant and major expansion plans announced since August 2018 represent 30 million units of new annual manufacturing capacity for consumer (car and light truck) tires and 6.6 million truck/bus tires, the data show.
Greenfield tire plant projects announced in the past year include:
- Continental A.G.'s in Rayong, Thailand, for motorcycle tires;
- Finixx Global's in Shaanxi Province, China, for consumer tires;
- Jiangsu General Science Technology's in Rayong, Thailand, for consumer tires;
- Maxtrek Tyres' in Kuantan, Malaysia, for consumer tires;
- Prinx Chengshan Tire's in Chonburi, Thailand, for consumer tires;
- Tianxi Tire's in China for truck/bus tires; and
- Toyo Tire's in Serbia for consumer tires.
Toyo Tire—which earlier this year secured additional financial support from Japanese trading concern Mitsubishi Corp.—topped the list of individual tire companies' budgets for new capacities, committing $515 million toward the Serbia project and an expansion at its U.S. plant in White, Ga.
More than half of the $3.5 billion of the investments announced in the past year, $1.89 billion, is earmarked for projects in Asia, followed by $875 million in Europe, $450 million in North America and $136 million in Latin America.
During fiscal 2018, the 22 leading tire makers devoted $12.9 billion toward capital expenditures, for an industry average of 7.1 percent of sales—on par with fiscal 2017.
Individually, Nexen Tire Corp., Ceat Ltd. and Nokian Tyres P.L.C. led the industry in spending intensity, devoting 24.4 percent, 17.7 percent and 14.1 percent of sales revenue, respectively, toward capital improvements.
Continental A.G., Bridgestone Corp. and Michelin spent the most in raw monetary value, at $3.68 billion, $2.43 billion and $1.97 billion, respectively.
In terms of spending on research and development, the leading tire companies devoted on average 4 percent of sales to the endeavor, up a couple of tenths from a year ago, according to Tire Business' analysis of the data. (See tables on Page 21 for details.)
Those reporting research and development spending committed 0.5 percent (Balkrishna Industries) to 7.2 percent (Continental) of their sales to the line item. Conti's ratio is skewed to a degree by its extensive automotive-component businesses; by contrast, the tire division's R&D spending ratio was 2.6 percent.
Some of the larger expansion projects announced in the past year include:
Bridgestone disclosed $225 million in specific investment projects, the largest of which is a $100 million upgrade/expansion of capacity at its Bridgestone de Mexico S.A. de C.V. unit's car and light truck tire plant in Cuernavaca.
The investment will allow the implementation of innovative processes and new technologies, while also strengthening the plant's capacity to produce high value-added tires such as run-flat tires. The 38-year-old plant in Mexico's Morelos state has an installed capacity of approximately 25,000 tires per day.
In Europe, Bridgestone is committing $41 million over four years to digitize the manufacturing processes at its eight European tire plants with a goal of meeting "evolving" customer demands faster and more flexibly.
The smart factory project will address energy savings, efficiency increases, waste reduction and process simplification.
In North America, Bridgestone is investing $40 million in its Warren County, Tenn., truck/bus tire plant to expand capacity by about 8 percent to 9,400 tires a day by year-end 2020, and $45 million in Canada to build an automated warehouse in Joliette, adjacent to its passenger and light truck tire plant there.
In Europe, Continental A.G. is investing $114 million to add capacity for larger diameter radial earthmoving and port materials-handling tires at its 73-year-old tire plant in Lousado, Portugal. The investment includes funding to expand an on-site research and development lab that is dedicated to off-road tires, the company said.
In North America, Conti invested roughly $10 million to build an Advanced Indoor Evaluation Center at its proving grounds in Uvalde, Texas, and is committing an undisclosed amount at its Sumter, S.C., car/light truck tire plant to add capacity for its ContiSeal puncture-sealing and ContiSilent noise-absorbing passenger tire lines.
In Asia, Conti broke ground on a $30 million plant in Rayong, Thailand, dedicated to motorcycle tires "in the immediate vicinity" of its recently opened passenger tire plant in that city. Set for operation in 2021, the plant will focus initially on radial tires and later will expand to manufacture bias-ply models as well
Cooper Tire and Sailun Vietnam Co. Ltd. have agreed to set up a joint venture to oversee the construction of a radial truck/bus tire plant in Vietnam rated at more than 2 million units annually. The proposed venture will be located near Ho Chi Minh City, Vietnam, at the site of Sailun Vietnam's existing operations and represents an investment of $220 million to $240 million.
The venture will extend Cooper's relationship with Sailun Jinyu Group Co. Ltd.—Sailun Vietnam's Qindao, China-based parent company—which already involves an offtake production agreement covering production of Cooper's Roadmaster-brand truck/bus tires at the company's Vietnam plant and Sailun Jinyu's pending purchase of a 35 percent stake in Cooper's Qingdao Ge Rui Da Rubber Co. Ltd. (GRT) joint venture in Qingdao.
In the U.S., Cooper is evaluating options regarding a possible expansion of its Tupelo, Miss. car factory to keep pace with growing demand for its products.
The company has submitted applications totaling $7.4 million to the city, covering upgrades to the plant's mixing department and green-tire storage area.
Qingdao Doublestar is planning to relocate its Doublestar Dongfeng Tire subsidiary in Shiyan, China, and upgrade it to a "smart" factory in a $220 million, 18-month project. With planned annual capacity of 1.5 million truck/bus and 5 million passenger tires, the unit will be built on a site in the Zhangwan District Industrial Park in Shiyan, Hubei province.
Finixx Global, a Thai supplier of self-sealing tires under the Finixx brand, reportedly is planning to build a plant in Baoji, Shaanxi Province, according to media reports in China.
The project represents an investment of $156 million and will be located at Baoji's Jinhe Industrial Park. The plant would be rated at 5 million tires a year, the reports said.
Goodyear is budgeting $180 million to modernize operations and expand capacity at its 50-year-old Fayetteville, N.C. plant, for larger rim-diameter passenger tires. The project includes $30 million in jobs-related incentives approved by the North Carolina Department of Commerce.
The Fayetteville plant is rated at 40,000 units a day with 2,900 employees.
In Europe, Goodyear disclosed plans to invest $36 million in its factory in Colmar-Berg, Luxembourg, to increase production of OTR tires and make process improvements, and $107 million at its Goodyear Dunlop Sava Tires plant in Kranj, Slovenia, to expand capacity by about 25 percent by 2022 with the addition of building equipment for larger rim-diameter tires.
The expansion will boost capacity by 1.8 million units a year and create up to 160 jobs, Goodyear said. Production will focus on replacement tires with 17- to 19-inch rim diameters, Goodyear said. Current annual capacity is listed as about 8 million units with 1,600 employees.
Jiangsu Chengtai Vehicle
A newly established company, Jiangsu is planning to build a motorcycle and specialty tire plant in northern Jiangsu Province valued at $152 million. The company's proposed project, located in Lianyungang's Zhewang Coastal Industrial Zone, would have an annual capacity of 6.6 million units—3.2 million motorcycle tires, 600,000 golf cart tires, 200,000 all-terrain vehicle tires, 1 million snowmobile tires and 1.6 million tubes.
Jiangsu General Science
Reacting to increasing international trade barriers, JGST announced plans to build a passenger and truck/bus tire plant in Thailand's Rayong Industrial Zone and is committing up to $300 million for the project. The plant is designed with capacities of 6 million passenger tires and 1 million truck/bus tires annually, the company said.
India's JK Tyre has budgeted $96 million to upgrade and expand capacity for truck and tractor tire capacity at the Kolkata, India, factory of its Cavendish Industries Ltd. affiliate. The project follows a three-year investment package JK committed to the former Kesoram Industries unit, which it acquired in 2016.
China's Zhaoqing Junhong Corp. Ltd.—d.b.a. Maxtrek Tyres—broke ground June 15 on a car and truck tire plant in the Malaysia-China Kuantan Industrial Park in Kuantan, Malaysia. The plant, Maxtrek's first outside of China, is designed to produce 6 million car and light truck tires and 500,000 truck/bus tires a year.
The company, which goes to market with the Antares and Maxtrek brands, said the project represents an investment of "several hundreds of millions" of Malaysian ringgit (100 million ringgit equals about $24 million at prevailing currency exchange rates).
The firm acquired Indonesia's P.T. Multistrada Ara Sarana Tbk., producer and marketer of the Achilles and Corsa brands as well as a number of private brands, paying $545 million for a company that generated $316 million in sales last year.
The 25-year-old company operates an annual production capacity of more than 180,000 metric tons, or 11 million passenger car tires, 9 million two-wheeler tires and 250,000 truck tires.
Pirelli is planning to transfer motorcycle tire production at a plant in Gravatai, Brazil, to another company plant in Campinas, Brazil, as part of a $136 million, two-year reorganization of its Brazilian operations.
Moving two-wheeler tire production to Campinas will create an "industrial hub" for car, moto and motorsport tires to serve the Latin American markets, Pirelli said. The transfer of production is expected to take until 2021.
Pirelli said the $136 million in investments will go toward modernizing and converting production to high value-added tires from standard products over the coming two years at the Campinas and Feira de Santana, Bahia, plants.
The company also is in talks with Prometeon Tyre Group—the former Pirelli industrial tires business that operates a truck and farm tire plant in Gravatai—to "evaluate actions aimed at mitigating the effect on employment."
Chinese tire maker Prinx Chengshan—a former Cooper Tire joint venture—is building a $300 million car and truck tire plant in Chonburi, Thailand, that could be operating by mid-2020. At full capacity, the plant will be rated at 4 million radial passenger and 800,000 radial all-steel truck and bus tires annually.
Prometeon Tyre, the manufacturer and distributor of Pirelli-branded truck, bus, agricultural and OTR tires, will invest $115 million over the next two-plus years to upgrade capacity at its truck, bus, agriculture and OTR tire plant in Izmit, Turkey.
Prometeon said the investment will increase annual capacity at the 58-year-old plant by as much as 75 percent by 2020, and exports from Turkey are expected to double once the capacity increases. Capacity at the plant currently is just under 1 million units per year.
Tianxi Tire, a newly established Liaoning Province rubber industry enterprise, has broken ground on a heavy-duty truck and bus tire plant in an economic zone in that eastern Chinese province.
The company has budgeted $210 million for the plant, which will be rated at 1.2 million units annually with 632 employees at full capacity.
Titan International Inc. has bought out fully one of the two partners it had in its JSC Voltyre Prom joint tire production venture in Russia, paying nearly $47 million in two transactions to settle the party's "put option" from January 2019.
The deal raised Titan's ownership stake in Volgograd, Russia-based Voltyre Prom to 64.3 percent from 43 percent. Russian Direct Investment Fund—which set up the Voltyre-Prom venture in 2013 as a co-owned joint venture involving Titan, OEP and RDIF—continues to hold a 35.7 percent minority stake in Voltyre Prom, although it has agreed to sell that share to Titan for roughly $50 million in cash and shares of Titan common stock.
Toyo's board of directors has approved a $450 million investment plan to build a passenger and light truck tire plant in Indija, Serbia, to support the company's growth plans for Europe, which represents about 15 percent of Toyo's global tire sales.
Toyo has selected a 150-acre site about 35 miles northwest of Belgrade for the factory, which will be rated at 5 million units a year at full capacity. Toyo plans to break ground in May 2020 at the site, with production slated to start by January 2022. The plant is expected to hit full capacity by summer 2023 with 500 employees,
In the U.S., Toyo is moving ahead with a previously disclosed expansion of its tire plant in White, Ga., this time to boost capacity nearly 10 percent to 13.9 million passenger and light truck tires annually by January 2021. The company budgeted nearly $65 million for the project.