FRANKFURT, Germany-The Asia/Pacific region continues to attract the majority of tire industry investments with about half of the $2.9 billion in expansions announced worldwide in the past 12 months. But North America and Europe each will receive $500 million or more in capital improvements in the coming years.
Capacity expansions by companies in the key supplier industries-steel cord, textile reinforcements and synthetic rubber-bring an additional $350 million or more to the expenditures list.
Group Michelin cornered the market on plant expansions in the past year, announcing new plant projects in China, France and Sweden, buying Stomil Olsztyn in Poland, streamlining capacities in Europe, broadening its ASEAN presence through expansions at its Siam Tyre partner and budgeting up to $900 million for North American expansions.
Also, the company is involved in upstream expansions in synthetic rubber in France and Thailand, and steel cord in Thailand.
Its capital investment tab for the coming three to four years is over $1 billion-perhaps as much as $1.5 billion-not including reserves for the pending joint venture in Europe with Continental A.G., nor for the company's long-anticipated move into India.
Michelin's capital spending has averaged more than 4 percent of sales the past three years, and the company has budgeted a 50- percent increase over 1995 for this year, taking the spending level to nearly 6 percent of sales.
Of the dozen billion-dollar tire companies, Cooper Tire & Rubber Co. devoted the highest amount of funds to capital expenditures, as a percentage of sales. Cooper's $194.9 million in spending was a record for the company, as was the 13-percent spending rate.
This spending included expansion projects at six of Cooper's 10 manufacturing plants, plus outlays at new plants for tire molds and for extruded hose.
Goodyear devoted $616 million last year to expansions and has budgeted more than $600 million again this year to ``support our growth, quality, service and cost objectives.'' The company's investment strategy focuses on new capacity in emerging markets while concentrating on investments for quality and productivity in mature markets, its annual report states.
More recently, CEO Sam Gibara told shareholders the company is planning the sale of certain non-key assets, with proceeds to be reinvested in the core businesses.
In the Asia/Pacific region, Japanese makers Bridgestone, Sumito-mo, Toyo and Yokohama all are building capacities outside of Japan-Bridgestone in India, Sumitomo in Indonesia, Toyo in China and Yokohama in The Philippines.
For the latter three, this is their first attempts at moving capacity ``off-shore,'' and for Yokohama it coincides with the ebbing of technology/off take agreements with Hankook in South Korea and P.T. Gadjah Tunggal in Indonesia.
Of the main Japanese makers, only Bridgestone has concentrated in the past on building a presence in the Pacific Rim outside of Japan with its own plants.
Bridgestone leads all other tire makers in Asian capacity-it already manufactures in Australia, Indonesia, New Zealand, Taiwan and Thailand, the company noted in its 1995 annual report. In Thailand, Bridgestone also is setting up a tire proving grounds to help it keep pace with automotive development there.
Bridgestone's Indian venture is due on stream in 1998, and tire production in China continues to be in the ``feasibility study stage.''
For the coming years, ``expanding our business in industrial goods, chemical products and other diversified products is a high priority,'' Mr. Kaizaki said. Non-tire products represent 24.4 percent of total revenues.
Michelin's broad-based expansion program in the U.S. tops the list of projects announced in the past 12 months, followed by an ambitious modernization project at China's Anhui Tyre, where the Indonesian industrialist Sjamsul Nursulim-founder and majority owner of Gadjah Tungal-has pledged $400 million to turn Anhui into a modern radial production complex.
Gadjah Tungal is not directly involved in the project financially but will be providing technological and logistical support.
The Middle East is the focus of two intriguing projects, one with Indian support, the other with South Korean backing. Both reportedly still are lining up finances.
India's Jumbo Group has announced a car and light truck tire manufacturing plant project for United Arab Emirates to be managed by its Dunlop India subsidiary, but using turnkey and/or production technology from Pirelli Tyre Holding. A site for the 1.5 million unit per year plant was not disclosed.
The second project, for a 3 million unit per year radial tire factory in Saudi Arabia, involves Bougary Trading & Construction Co. in Saudi Arabia and the Halla Group in South Korea; the project is on hold, however, because the partners have been unable to find a supplier of manufacturing technology, a Halla spokesman said.