Investment momentum in tire production continues

Based on article published in the Nov/Dec issue of European Rubber Journal magazine

London - Major tire manufacturers are continuing to build on an investment drive that, last year, saw commitments of over $7.3 billion to establish new plants and capacity expansions.

Among a series of expansion projects launched or delivered in 2017, was Bridgestone’s announcement of a major investment programme in Europe: to upgrade its facility in Burgos, Spain and Polish sites in Poznan and Stargrad.

The Japanese tire-maker said in October that the Ä266-million investment will bring “most advanced production technologies” to the three European sites.

The same month saw Michelin bring online a capacity expansion for truck & bus tires at its Chennai plant in India. The new production line is expected to double the current capacity of the facility to over 30,000 tonnes/year by 2018.

Another major October announcement was Toyo Tire & Rubber Co.’s decision to expand capacity in the US and Malaysia, while considering expansions at new and/or existing plants “to fulfil its growth expectations.”

Toyo is budgeting $125 million and $187.5 million, respectively, for the US and Malaysian projects. These will add capacities for 2.4 million passenger car tires a year at the company’s White, Georgia, plant and 4.8 million a year at the Toyo Tyre Malaysia Sdn Bhd. plant in Perak, Malaysia.

Among other significant developments was Nokian Tyres’ recent ground-breaking on a $360-million project to build a new plant in Dayton, Tennessee. Expected to produce 4 million car and light truck tires a year, the US facility is due on stream by 2020.

And in September, Goodyear started construction work on a passenger car tire plant in Colmar-Berg, Luxembourg, that will use ‘additive manufacturing technologies’ to produce premium tires in small-batch quantities on-demand.

The $77-million facility, set to open in 2019, is located close to Goodyear’s Luxembourg innovation centre and tire-proving grounds. It will produce around 500,000 tires annually.

Above average

Overall the capital investment figure for 2016 represented a measurable drop from record spending of $10 billion-plus in 2015-16. However,  it was still ahead of the annualised average for the past decade.

The expansion projects collectively represent more than 80 million units of new passenger and light truck tire capacity and 7 million units of truck, bus and OTR tires per year.

This is balanced by only a couple of plant closures of note – Goodyear’s car and light truck tire factory in Philippsburg, Germany (6 million units per year), and Giti Tire Group’s truck tire factory in Chongqing, China (1.5 million units/year).

Among the investment announcements last year were eight new tire plant projects, including three in the US – Nokian’s in Tennessee; Qingdao Sentury Tire Co. Ltd’s in LaGrange, Georgia; and Wanli Tire Group’s in South Carolina.

Slightly more than half of the specific investments are earmarked for expansions in Asia, with a third, or nearly $2.5 billion, budgeted for North America.

Wanli Group’s $1 billion in declared investments – for the projected US plant in South Carolina – qualifies as the top capital spending for the 2016-17 period.

Goodyear is a close second at $957 million. It would easily be considered no. 1 if it pulls the trigger on the pending $250-million project at its plant in Topeka, Kansas.

Bridgestone Corp., China’s Zhong-ce Rubber Co. Ltd and Continental AG rank next at $654 million, $620 million and $600 million, respectively, committed to new plants and capacity expansions.

For fiscal 2016, the 20 leading tire makers devoted $10.9 billion toward capital expenditures, which was 6.9% of combined revenues, slightly up from the 6.6% recorded a year ago.

Individually, Apollo Tyres Ltd. and Brisa-Bridgestone Sabanci Tire Mfg. stood out among the others, devoting 27.8 and 15.2% of revenue, respectively, to capital improvements in fiscal 2016. Both companies were in the midst of building new factories, which skewed their data upward.

The averages vary from 0.2% for Ceat Tyres Ltd. to 6.9% for Continental, although Conti’s average is skewed because of its sprawling automotive supply divisions. Conti’s tire business-related R&D spending was 2.4%.

Individual expansion projects, by company alphabetically, include:

Bridgestone

• $304 million to expand capacity at plants in Pune and Indore, India, over the coming five years. The projects will boost daily capacity nearly 60% by 2022 to about 41,000 tires, and enable Bridgestone India Pvt. Ltd to enhance the product mix.

• $150 million to build two aircraft tire plants in Thailand—one for new tires and one for retreading.

• $180 million to up capacity at its car and light truck tire plant in Wilson, North Carolina.

Continental

• $294 million to boost capacity at its six-year-old car tire plant in Hefei, China, by 30% to 20 million tires a year. The phase 4 project will add 6 million units of annual capacity for passenger tires.

• $10 million to build an indoor tire testing centre at its US proving grounds outside Uvalde, Texas, to support the firm’s vision of being the preferred technology partner for Continental’s original equipment customers.

• $295 million for a car and light truck tire plant in Rayong, Thailand, with an initial annual capacity of 4 million tires and up to 900 employees. It is scheduled to open in 2019 with sufficient space for a potential expansion of up to 25 million tires per year.

Eurl Saterex-Iris

•$250 million to $300 million for a car and truck tire plant in Setif, Algeria, rated at 1 million car tires initially by 2018 and 2 million car and truck tires a year in Phase 2.

Global Rubber Industries

• $40 million for a plant to manufacture pneumatic agricultural, industrial, OTR and construction tires in Badalgama, Sri Lanka. The 1.25 million-sq.-ft. plant will have a rated capacity of 25 metric tons a day.

Goodyear

• $485 million to expand annual capacity at its Pulandian, China, car and light truck tire plant to 5 million units.

• $162 million to add capacity for radial aircraft tires at its car and truck tire plant in Phathumthani, Thailand.

• $250 million (tentative) for “strategic investments” in its Topeka, Kan., truck and earthmover tire factory, according to the terms of a local financial incentive agreement.

Guizhou Tyre

• $245 million for a truck and bus tire plant in Vietnam, near Ho Chi Minh City, with an annual capacity of 1.2 million units. The 1.47-million sq.-ft. factory could be on stream as early as 2018.

Hankook Tire

• Hankook envisions expanding its global manufacturing capacity more than 30% by 2020 and is considering five locations for a new plant, potentially Mexico, Brazil, the Middle East, Eastern Europe and Russia.

Hixih Rubber Industry Group

• $690 million to cover projects at its Shenzhou Tyre and Tongli Tire Co. Ltd. subsidiaries in Jining, Shandong, China, to add annual capacity for 12 million passenger tires and 2 million truck/bus tires.

Jiangsu Feichi Tire

• $30 million for an OTR production line at its plant in Xinyang Economic Zone, Yancheng City, China, with a projected annual capacity of 100,000 units.

Jiangsu General Science

• $23.5 million to add passenger tire capacity at its Wuxi, China, truck tire plant.

Michelin

• $37.6 million to cover the start of production of new tire models at its Zalau, Romania, plant, targeted at the lower levels of the “intermediate” market segment and will include the Tigar brand. The new investment will create 100 jobs by 2021.

• $68 million through 2019 at its steel cord plant in Zalau to boost capacity there by 50% to 60,000 metric tonnes.

• $21 million to upgrade its Dundee, Scotland, plant for larger-sized tires and to reduce its environmental impact.

Nokian Tyres

• $360 million to build an 830,000-sq.-ft. plant in Tennessee, rated at 4 million car and light truck tires a year, with production coming on stream by 2020.

• $92 million to boost capacity for car tires at its Vsevolozhsk, Russia, plant 10% to 17 million units as reported by the company.

Pilipinas Agila Tyre Philippines

• $200 million for a plant rated at 4 million tires a year.

Pirelli Tire

• $222 million to boost car tire capacity 50% – to 15 million units/year – at its plant in Slatina, Romania, by 2021, also adding capacity for motorsports tires.

Qingdao Fullrun Tyre

• $200 million for a plant in Malaysia, to be called “Jinma Rubber & Tyre Tech Corp. Ltd.”

Qingdao Sentury Tire

• $530 million for a car and light truck tire plant in LaGrange, Ga., rated at 12 million tires a year and 1,000 employees at full capacity.

Shandong Linglong

• $120 million for a tire research subsidiary in China.

• $120 million to add 800,000 units of annual capacity for radial truck tires at its Chonburi, Rayong, Thailand, plant.

Shandong Wanda Boto Tyre

• $275 million for a plant in Malaysia, in Jasin in that country’s Malacca state. Tire types and capacity information were not disclosed.

Shandong Yinbao

• $190 million to add passenger tire capacity to the existing truck tire line at its Delun Rubber subsidiary’s plant in Chuzhou, Anhui Province, China. The project will add 4 million car tires a year to the plant’s capacities of 3 million truck and bus tires and 200,000 specialty tires.

• An undisclosed sum to set up a car and truck tire joint venture in Thailand with local tire makers N.D. Rubber Public Co. Ltd. and P.T. Siam Tyre Ltd.

Sumitomo Rubber Industries

• $260 million to upgrade and expand capacity at its Hunan, China, factory 60% to 100,000 passenger tires a day by 2021.

• An undisclosed sum to open a technical centre at its Tonawanda, N.Y., factory and revamp/expand its 70-acre US test track in Huntsville, Alabama.

Trelleborg Wheel Systems

• An undisclosed sum for upgrades to the Ruma, Serbia, agricultural/industrial tire plant.

Zhongce Rubber

• An undisclosed sum to add 3,000 to 5,000 units of daily capacity for bias industrial and motorcycle tires at its 2-year-old Zhongce

Rubber (Thailand) Co. Ltd. plant.

Bruce Davis of Tire Business, a US sister publication of ERJ has contributed to this report.