Cooper Tire & Rubber Co. is buying majority control of Shandong Chengshan Tire Co. Ltd.'s tire operations in Rongchen City, China, and will use the venture to launch the Cooper brand into the Chinese marketplace.
Cooper is paying $70 million to gain 51-percent control of Shandong Chengshan's tire activities, which will operate from now on as Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Truck Tire Co. Ltd.
Both will operate from Chengshan's single factory complex in Rongchen City, Shandong Province.
Completion of the joint venture agreement is conditional upon Chinese government and regulatory approval, Cooper said, which it expects to happen before year-end.
Shandong Chengshan is considered China's third largest tire maker, with projected sales this year of $500 million, Cooper said. The company makes passenger and light truck radials as well as radial and bias commercial tires primarily under the brand names Chengshan and Austone and has an extensive domestic distribution system.
Cooper plans to start making Cooper-brand tires at the plant by as early as next year, principally for the Chinese market, a spokeswoman said. Some types and sizes may be exported, but the focus will be on the domestic market, where Shandong Chengshan serves both the original equipment and replacement markets.
``This is another major step in our Asian strategy,'' said Thomas A. Dattilo, Cooper chairman, president and CEO. ``Chengshan is an excellent and profitable Chinese manufacturer that is already selling a significant number of tires around the world, and especially in China where Cooper has plans to have a leading market share position in the future.''
Cooper said it was too early to say what, if any, additional investments it might have to make to ensure the 29-year-old factory is up to its standards. Employment there is listed at 6,000 with annual capacity of 7 million units.
This move would be Findlay-based Cooper's third manufacturing activity in China. It already sources entry-level passenger car radials and medium truck radials from Hangzhou Zhongce Rubber Co. Ltd. in Hangzhou and is a 50-50 partner with Taiwan's Kenda Rubber Industrial Co. Ltd. in a $200 million plant in Jiangsu Province, near Shanghai, that is due on stream next year.
The deal with Chengshan Shandong also includes 25-percent ownership of a steel cord factory located adjacent to the tire plant in Rongchen City.