Goodyear to set up plant in Mexico for high-end tires

Mexico City, Mexico — Goodyear has selected a site near San Luis Potosi, Mexico, as the location of a car and light truck tire plant the company will build to supply markets throughout the Americas.

Goodyear has budgeted $500 million (€461 million) to $550 million for the plant, which should begin production by mid-2017. Planned capacity will be 6 million tires a year, with 1,000 employees at full capacity, the company said.

The plant will focus on what Goodyear calls “high value-added” tires, demand for which in the Americas is expected to grow by 10 million units a year through 2019.

Goodyear Chairman and CEO Richard Kramer announced the selection at a ceremony April 24 in Mexico City with Mexican President Enrique Peña Nieto.

Kramer said Goodyear chose Mexico for the plant, its first new tire factory in the Americas in 25 years, because “San Luis Potosi is an ideal location...."

"Its central geographic location will enable us to support our valued customers and consumers throughout North America, Mexico and Latin America," he added.

Goodyear said it selection of San Luis Potosi follows an extensive review of potential locations throughout the Americas. The review took into consideration factors including cost structure, logistics, infrastructure, skilled workforce, tariffs and quality-of-life issues.

San Luis Potosi is a community of about one million inhabitants in north central Mexico, about 250 miles north of Mexico City.

Goodyear last produced tires in Mexico in 2001 before it shut its plant in Tultitlan, Mexico, which was rated at 20,000 tires daily. At the time Goodyear cited high costs as the reason for its decision to shut the plant.

The new factory will reflect Goodyear’s commitment to the environment. It will be a zero-waste-to-landfill and zero-solvent facility, and it will use natural gas, energy efficient LED lighting and state-of-the-art dust collection equipment, the company said.

Goodyear did not disclose the physical size of the site. Ground-breaking is scheduled for June. It's not known at this time what financial support Goodyear is getting from Mexico.

With the construction of its plant, Goodyear will become the seventh tire maker in Mexico, joining Bridgestone Corp., Continental AG, Cooper Tire & Rubber Co., Group Michelin, JK Tyre & Industries Ltd. and Pirelli Tyre SpA in that capacity. Continental's plant, opened in 1975, also is in San Luis Potosi.

Mexico is one of the few countries with which the US has a positive balance of trade. Last year the US exported $1.66 billion worth of tires to Mexico and imported $649 million, according to Tire Business' analysis of US Department of Commerce data.

Mexico is a growing automotive power in the Americas. It's expected to overtake Brazil as the largest automobile producer in Latin America, according to consultant IHA Automotive. Mexico was projected to produce 3.1 million autos last year, IHS said, a level of production that would make the nation the seventh largest auto producer worldwide.

At the same time, TechSci Research is forecasting the value of the Mexican tire market to hit $8 billion by 2018, as personal vehicle ownership grows from the relatively low level of just 275 cars per 1,000 inhabitants in 2012.