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November 22, 2004 01:00 AM

New factory for Shanghai Tyre

Bruce Davis
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    Shanghai Tyre & Rubber Co. Ltd. (STRC), parent of and primary supplier to China Manufacturers Alliance (CMA) L.L.C., has broken ground on a truck and off-the-road tire plant in Jiangsu province that will turn out 2.5 million radial truck tires a year by 2007.

    The new plant, in Rugao, represents an investment of $120 million, according to Fan Xian, deputy director for STRC, and will be instrumental to the firm's plans to hit $1.2 billion in sales by 2010. Sales last year were in the $300 million range.

    STRC, whose primary brand is Double Coin, selected Rugao because land was available at a reasonable cost and labor costs are lower than in the Shanghai market, Mr. Xian said. In addition, he said STRC's Shanghai plant is operating at full capacity with little opportunity to expand.

    The Rugao site is about two hours north of STRC's existing factory complex on the opposite side of the Changjiang River; the city of Rugao bills itself as a developing industrial area with access to the sea.

    The framework of the new plant already is in place, Mr. Xian said, and it could be producing tires as soon as late 2005 but certainly by early to mid 2006. The factory, to operate as Shanghai Rugao Tyre & Rubber, will gear up to full capacity by 2007 while adding up to 150,000 units of annual capacity for radial OTR tires and additional capacity for radial industrial tires, Mr. Xian said. It will employ 1,800 workers.

    Annual truck radial capacity could double to 5 million units by 2010, with up to half that earmarked for export.

    The new plant is an opportunity for STRC to revamp and upgrade its product line, said Larry Williams, CEO of CMA L.L.C. of Monrovia, Calif. Mr. Williams said demand in North America for STRC's products is twice what it can supply at the moment.

    In addition to the new plant, STRC recently bought a stake in a natural rubber plantation in Thailand and is considering setting up a sales subsidiary in Europe along the lines of CMA, Mr. Xian said.

    Besides the Double Coin truck radial product line, CMA also offers Warrior bias-ply truck, OTR and industrial tires. STRC also makes the Dynatrac line for American Tire Distributors Inc. and the Akuret line for Del-Nat Tire Corp., Mr. Williams said.

    In addition, CMA has started selling rubber tracks for tracked agricultural vehicles and intends to expand the product range to cover most popular sizes, he said.

    CMA L.L.C. is one of two importers of Chinese tires using the CMA name. CMA Inc., owned by Jeff Kreitzman and Wayne Hung-the individuals responsible for setting up CMA in 1998-broke away from CMA L.L.C. earlier this year.

    CMA Inc. claims North American distribution rights to the Advance, Armour, Bluestar and Wynstar tire brands in car, light truck, medium truck, industrial, OTR, forestry and specialty types.

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