In January, Ford Motor Co., which Trump regularly criticised during the presidential campaign for creating jobs outside the U.S., canceled the $1.6 billion light vehicle assembly plant it was constructing in San Luis Potosí in central Mexico. It had planned to make 350,000 small cars a year at the facility and insisted it would not bow to political pressure. Whether or not Trump influenced its decision is open to speculation.
"There is concern, especially in the automotive industry, and we have to watch the situation very carefully," Franco Herrera Sánchez, Guanajuato state's under-secretary of investment promotion, told Tire Business, referring to Trump's election victory. Guanajuato has a large automotive industry cluster of several hundred companies.
However, Akron-based Goodyear, which broke ground on its first plant in the Americas for a quarter of a century (also in San Luis Potosí) in July 2015, has pressed on with plans.
Known internally as the "Americas Project," the $550 million facility is slated to be operational starting in July. In 2015 Goodyear said the plant would have an annual production capacity of 6 million high-value-added tires, such as the Eagle F1 and Wrangler All-Terrain Adventure with Kevlar.
Goodyear operated a plant in Mexico, in Tultitlán, a dozen or so miles outside Mexico City, for 60 years but shut it down in 2001 "because its high costs are incompatible with current economic conditions," the company said at the time.
Used tires a danger
Mexico's 2,400 or so tire dealers sold 39.4 million new tires in 2016, according to Elizabeth Ventura Rendón, president of their national association, Asociación Nacional de Distribuidores de Llantas y Plantas Renovadoras AC (ANDELLAC).
However, the legal and, in some cases, illegal importation of up to 2 million used and low quality tires annually from China, South Korea and the U.S. has blurred the domestic replacement tire picture.
"There's no protection (for the national industry)," Ventura said in a 2016 Tire Business interview, adding that the association was lobbying the federal government to try to get the imports stopped. However, it was still an issue in June this year, an ANDELLAC spokesman told Tire Business. "Used tires are dangerous," he said.
"The authorised annual quota of imported used tires that are sold along Mexico's frontiers has been 840,000 units in recent years," a spokesman for national rubber industry chamber CNIH said.
"However, in recent years between 1.1 million and 1.2 million have been imported." Others say the imports are on a considerably larger scale.
According to Ventura, cheap imports comprise 60% of the national market for commercial vehicle tires — from 20-inch diameter rims and upward.
Following the lead of her predecessor, Raúl Castillo Arteaga, she wants to turn Mexico into a market based on technology, rather than on price.
In the official ANDELLAC magazine, Castillo once wrote: "I disagree with those who affirm that…customers make decisions based on price. They do that when we, whose job it is to act as consultants, fail to offer them any other means of comparison."
Tires are not commodities, he added, but manufactured goods that require a high degree of engineering sophistication.
Statistics, new plants
Bridgestone Americas, Michelin North America, Continental Tire the Americas, Goodyear and Pirelli & C. S.p.A. are among the leaders in a market that boasts about 100 different brands. Some reports say the quintet satisfies 40% of the demand for new passenger car and light truck tires in Mexico.
The country's state-run statistics office, Instituto Nacional de Estadística y Geografía (INEGI), said the country produced 21.6 million tires for passenger cars and pickups in 2015, up from 20 million in 2014. That figure increased by several million in 2016, according to Ventura.
The country has nine tire factories. Bridgestone has two, Continental, Cooper, Pirelli and Michelin have one each, and JK Tornel has three. Castillo described them as "first-world, more modern than in most other countries."
Pirelli is building a second tire factory at its 1.5-million-sq.-ft. manufacturing complex in Silao, 220 miles northwest of Mexico City. It expects to start production there this summer.
The company plans to reach the complex's production capacity of 7.5 million premium tires for cars and light trucks a year by year-end 2018. Current production is 5 million tires annually.
A second Michelin plant in Mexico is under construction in nearby León at a cost of $510 million. Covering 1.5 million square feet, it is scheduled for completion in late 2018 and will have an annual installed production capacity of 4 million or 5 million Michelin-brand tires a year. Most of them will be for 18-inch-plus rims in the North American OEM and replacement markets.
Most of the plant's output will be exported to the U.S. and Canada, Scott Clark, executive vice president and COO, Michelin North America, told Tire Business last August.
The new Goodyear, Pirelli and Michelin facilities are not included in the above list of nine tire manufacturing plants.
Light vehicle output