YANZHOU, China (Oct. 12, 2005) — Pirelli S.p.A. will add capacity for car tires in the next two years at its joint venture truck tire plant in Yanzhou, Pirelli officials said at a ceremony marking the inauguration of Pirelli truck tire production at the factory in Shandong Province.
Pirelli has committed about $180 million over three years to boost truck tire capacity and add car tire capacity at the plant, a 60-40 joint venture with China's RoadOne Tyres.
The expansion project will more than double truck tire capacity to 1.2 million units a year, Pirelli said, and will allow the venture to pursue its goal of attaining a market share of 3 percent short term and growing at twice the industry pace thereafter.
The RoadOne plant was set up two years ago by Yinhe Group, China's largest manufacturer of conveyor belts, using technology supplied by Beijing Rubber Institute, said Wang Xiao Dong, manager/engineer for RoadOne. The factory now uses Pirelli technology following the Italian company´s acquisition of a 60-percent share.
Francesco Gori, head of Pirelli Tyres, said the process from initial approach to final acquisition had taken 99 days. The acquisition was advised by HSBC Global Investment Banking. Robert Dodds, director of global investment banking for HSBC, said the whole process was the fastest Chinese acquisition he had seen at HSBC.
Pirelli intends to use the factory mainly to supply Chinese domestic markets and to export to Australia and southeast Asia.
Mr. Gori added that the presence in China would not significantly affect Pirelli´s purchasing strategies for either machinery or ingredients, except to bring new sources of supply of raw materials to fill gaps created by shortages in other parts of the world.