ERJ staff report (TB)
By Bruce Davis, Tire Business Staff
Akron, Ohio - The world's major tyre makers committed a record $10 billion-plus in capital investments in the past year to expand and upgrade their manufacturing operations worldwide, according to Tire Business' analysis of available data.
The investments tracked by Tire Business represent potential global output by nearly 250 000 units of new daily consumer and commercial tyre capacity, including a dozen greenfield tyre plants.
The total topped the amount budgeted during 2010-2011 by about 6 percent and exceeded the previous high of $9.6 billion committed during the 2007-08 period, according to Tire Business data. The totals are for projects publicly announced and therefore represent only part of the overall investment picture for the global industry.
The largest share of the capital expenditures, roughly $2.9 billion, will be invested in Asia, although this is just slightly more than $2.75 billion earmarked for projects in North America.
More than $1 billion is committed to projects in Europe, with the bulk going to Eastern Europe, with the rest split between Latin America and Africa/Middle East.
The investments represent at least 222 000 units of new daily passenger tyre capacity, 23 000 units of new daily truck tyre capacity and roughly 600 tonnes of new daily off-highway (farm, OTR, etc.) tyre capacity.
The new capacity investments are balanced by only one plant closing, representing 50 000 units of daily capacity.
For the second year running, Bridgestone Corp. topped the investment ladder with $2.6 billion in spending committed to seven major projects, including three greenfield plants.
Fellow Japanese tyre maker YokoÂ¬hama Rubber Co. Ltd. checks in at No. 2 with $1.75 billion in committed spending, although its expenditures are spread out over four years, through 2017.
Pirelli & C. S.p.A. is No. 3 with $1.12 billion to support projects in Asia, Europe, Latin America and North America.
Group Michelin's total for the year was just shy of $1 billion.
As for total capital expenditures committed during the major companies' most recent fiscal years, spending by most companies was up double digits in 2011 over 2010, driving up the cap-ex/sales ratio nearly a full point to 7.1 percent, according to Tire Business analysis of the firms' financial data.
At least three firms-South Korea's Nexen Tire Corp., Finland's Nokian Tyres P.L.C. and China's Shandong Linglong Rubber Co. Ltd.-more than doubled capital spending in 2011 over 2010. As a result, Nexen's cap-ex spending ratio leaped to 23.8 percent.
At the same time, the major tyre manufacturers' spending on research and development slipped slightly to just shy of 3 percent of sales from 3.2 percent a year ago. Some of the decline may be attributed to the rapid sales growth last year, fueled by higher selling prices driven up by rising raw materials costs.
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Article from Tire Business/p>