Pirelli's new China plant to start production

By Namrita Chow, Tire Business correspondent

Yanzhou City, China - Pirelli Tyre SpA expects to begin producing passenger tyres by the fourth quarter at a new factory in Yanzhou City, following an estimated $100 million (€70.5 million) investment over the past two years.

The new capacity will encompass Pirelli's full range of passenger tyres in 14- to 18-inch rim diameters, with an emphasis on the high end of the market, according to Giuseppe Cattaneo, CEO of Pirelli Tyre Co. Ltd (China) -- as the firm's venture in China is now known.

Pirelli plans to market the passenger tyres domestically and throughout Asia, Cattaneo said.

At full capacity the new factory is designed to produce 4.5 million tyres annually. Pirelli declined to reveal the physical size of the new plant, built in the same Shandong Province industrial park as the existing truck tyre plant, which was originally built by RoadOne Tyre Co. Ltd.

The addition of passenger tyre capacity in Yanzhou was part of a three-year, $180-million expansion and modernisation project. Industry sources say Pirelli may invest another $200 million in a second-phase expansion that could double annual capacity to 9 million units. Pirelli has released no timetable for a second phase.

The truck tyre plant-a 60-40 joint venture with RoadOne Tyre previously known as Yanzhou Evolution Tyre Co. Ltd.-is rated at 1.2 million radial truck tyres a year, although annual output is closer to 700 000, Cattaneo said.

Pirelli and RoadOne formed their joint venture in 2005.

“We are happy with 700 000,” Cattaneo said. “Technically the truck tyres are for the local market; a marginal amount is exported.”

The expansion should add about 500 jobs to the 1500 currently in place at the Yanzhou facility, Pirelli said, as production ramps up.

The factory uses raw materials supplied by Pirelli's usual international suppliers, including rubber from Thailand and Malaysia.

Pirelli Tyre Co. (China) sells tyres using two approaches, said Cattaneo: classical distribution selling to regional provincial distributors and retail shops. Pirelli sells through two types of shops in China:

Pirelli's joint venture partner is a subsidiary of Yanhe Group, a conveyor belt manufacturer.

Cattaneo has been CEO of Pirelli's Chinese company since 2004, joining the company after seven years in China with other companies, including Antibioticos Biotechnologies SpA, Gruppo Antibioticos SpA and Gruppo Arquati SpA

From Tire Business (A Crain publication)