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March 01, 2004 01:00 AM

Toyo plans to build plant in U.S.

Bruce Davis
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    Toyo Tire & Rubber Co. Ltd. will build a tire plant in the U.S. in the coming two years, budgeting $150 million for a factory capable of making 2 million passenger and light truck tires a year.

    Toyo said it is evaluating several sites ``in the eastern half'' of the U.S. for the factory, but the firm has bestowed ``favored'' status on a site in Bartow County, Ga., where a local industrial development group has been pitching the company on a 258-acre site near Cartersville, Ga.

    The facility would begin production by early 2006 with initial employment of 350. It would concentrate initially on tires for the replacement market, especially performance tires, but eventually could be used for original equipment fitments if the firm decides to pursue OE contracts in North America, a spokesman said.

    Spokesmen for the company declined to comment on what manufacturing technology would be used at the factory. In recent years, Toyo has begun implementing ``T-Pro,'' a flexible small-run production method developed with assessment support from Toyota Motor Corp.

    Toyo said its decision to produce tires in the U.S. is based on several factors, including the need to increase capacity to meet ``robust overseas demand'' and a desire to hedge against currency fluctuation risks.

    ``Producing Toyo tires at a U.S.-based facility will more fully enable us to serve our customers in North America,'' said Yoshio Kataoka, president and CEO of Toyo. ``Our greatest demand is in the North American market.''

    Toyo reported about $500 million in sales in North America last year-representing more than a third of the firm's global tire sales-good for about a 2- to 3-percent share of the North American replacement markets for passenger and light truck tires and closer to 4 percent in the medium truck tire markets.

    Toyo currently has only a handful of OE fitments on imported cars, a company spokesman said.

    Analyst Saul Ludwig of McDonald Investments Inc. in Cleveland said he is ``somewhat surprised'' to see anyone building a plant in the U.S., considering the high cost of labor and other manufacturing expenses in this country.

    The proposed site, northwest of Atlanta, is only about 20 miles from Rome, Ga., where Pirelli Tire North America Inc. set up an automated factory two years ago dedicated to larger-diameter high-performance tires. A local residents' group opposes the plan, according to local media reports, saying taxpayers would have to foot the bill for bringing utilities and roads to the rural site.

    The announcement is considered good news for the industry, which lost more than 1,800 jobs last year when Goodyear closed its Huntsville, Ala., facility and scaled back production at its Tyler, Texas, plant and Titan International Inc. mothballed its Brownsville, Texas, factory.

    The facility will be Toyo's second wholly owned manufacturing plant in the U.S., following the start of production last year of anti-vibration components at Toyo Automotive Parts in Franklin, Ky. Toyo also owns a minority share of truck tire manufacturer GTY Tire Co. in Mount Vernon, Ill.

    In the past few years, Toyo has budgeted more than $100 million in expanding its Sendai, Japan, factory and investing at the China facilities of its Cheng Shin/Maxxis International joint venture partner.

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