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December 19, 2019 01:20 PM

Year in Review: U.S. sees more tire industry investments

Chris Sweeney
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    Even though plans for a couple of major tire manufacturing plants were put on hold, there were still multiple sites being built in the U.S.

    Including one in the rubber capital of the world.

    Bridgestone Corp. is constructing an 80,000-sq.-ft. facility in Akron that is expected to be finished by the end of 2019 with production scheduled to begin before the end of 2020.

    When fully operational, the site will produce about 30,000 race tires per year. It will take about four years to fully integrate the new site.

    Investment details were not disclosed.

    Continental A.G. opened its tire manufacturing plant in Clinton, Miss., in October, representing a $1.4 billion investment. The site will employ about 2,500 people as it scales up to full capacity throughout the next decade.

    Two years after breaking ground in Dayton, Tenn., Nokian Tyres P.L.C. began production at its $360 million plant in October. It currently employs about 100 and is expected to reach about 400 when the 830,000-sq.-ft. site reaches full capacity.

    And while not a new tire plant, Toyo Tire moved ahead with an expansion it disclosed in 2017 at its facility in White, Ga., to boost capacity by nearly 10 percent to 13.9 million passenger and light truck tires by January 2021. The firm budgeted nearly $65 million for the project, part of its fifth phase of expansions, and will create about 120 new jobs. It has invested more than $1 billion at the facility since it opened in 2005.

    Rough year

    The first half of 2019 was challenging for tire makers, with many citing slowing global sales of new cars, raw material costs and tariffs as obstacles.

    Bridgestone, Continental, Nokian, Pirelli, Sumitomo and Toyo all downgraded their earnings outlooks for 2019. Michelin reported an increase financially thanks largely to competitive gains and contribution from recently acquired businesses, but also reported that its volume declined by 0.9 percent.

    Goodyear also reported a 6 percent drop in sales thanks to lower volume. The tire maker also disclosed that it has begun offering voluntary buyouts to certain employees at its 90-year-old facility in Gadsden, Ala. The firm said in an 8K filing with the Securities and Exchange Commission that the move is part of its strategy to strengthen U.S. competitiveness.

    And abroad, Cooper Tire disclosed plans to phase out production at its plant in Melksham, England, impacting 300 jobs at the former Avon Tyres plant Cooper has operated since 1997. The move is designed to enhance the firm's competitiveness in the region.

    Andreas Topp (left), Continental’s vice president of material and process development and industrialization, with Kordsa CEO Ali Caliskan.

    Setting standards

    Continental and steel cord supplier Kordsa Technik Teksil A.S. unveiled a new technology system that the parties hope will change the tire industry.

    Named Cokoon, the development is aimed initially for use in tire cord materials, but in time could have uses in mechanical rubber goods like hoses and conveyor belts.

    The pair hope that the development will become a new standard in the industry as it eliminates the need for resorcinol and formaldehyde—two materials used in the dipping process used to treat the cords. The firms said these two materials have been the industry standard for more than 80 years as the adhesive agent for reinforcing materials.

    The pair are making Cokoon an "open source" technology, meaning other tire makers and suppliers can access the bonding system without paying licensing fees so long as they in turn agree to make their patents concerning further advancement of the technology available to other partners free of charge through a licensing pool.

    Time will tell if the development becomes an industry standard.

    Definitely, maybe?

    It was a pretty quiet year on the acquisition front compared to 2018, but that could change in 2020.

    Yokohama was reportedly in advanced level discussions to acquire Prometeon Tire Group, two separate sources with knowledge of the negotiations confirmed in September.

    According to the sources, YRC signed a "no shop" (exclusivity) contract with PTG and began conducting a thorough due diligence in October.

    What comes of the process remains to be seen, but PTG's four tire plants in Brazil, Egypt and Turkey would complement YRC's $1.18 billion acquisition of Alliance Tire Group, an agricultural tire manufacturer, in July 2016.

    Prometeon was separated from Pirelli in 2017 as part of ChemChina's acquisition of a controlling interest in the Italian tire maker.

    Senard

    Leadership shuffle

    Former Michelin CEO Jean-Dominique Senard left the company in February to become chairman of French car maker Renault in the wake of Carlos Ghosn's arrest in Japan under suspicion of various compensation manipulations.

    Senard continued to serve as Michelin CEO until his term was set to expire in May. The company had previously named Florent Menegaux his successor. Senard had served as Michelin's CEO since 2012.

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