GREENVILLE, S.C. (April 10, 2012) — Michelin North America Inc. (MNA) will invest $750 million in South Carolina to build a second OTR tire plant and expand its existing OTR tire plant in Lexington.
The new plant will be built on land near Starr, in Anderson County, to the southwest of Greenville. Michelin already has a rubber compounding/calendering plant there and hundreds of acres of land on which to build.
Michelin said it expects to break ground in the coming weeks with initial production expected by late 2013. Michelin did not disclose the size or capacity of the new plant or the size of the expansion at the 825,000-sq.-ft. Lexington plant, where the company has been making OTR tires since 1997. It invested $85 million in 2005-09 to boost capacity there.
The new plant will produce large OTR tires, up to 63 inches rim diameter, primarily for the mining industries, company executives said. The plant will produce for export as well as domestic customers.
Speaking at a press conference in Greenville, MNA Chairman and President Pete Selleck said there is “unprecedented demand” for Michelin earthmover tires throughout the world, and called the decision to invest in South Carolina a “tribute to the productivity of our employees and the pro-business environment in South Carolina….”
The two projects together will create up to 500 jobs, boosting Michelin's employment in the Palmetto State to more than 8,000.
“Michelin intends to maintain and strengthen its leadership in all its specialty businesses, especially earthmover radial tires,” said Jean-Dominique Senard, managing general partner of Michelin, who noted the global market for earthmover tires grew by more than 20 percent from 2009 to 2011.
Michelin derived about 15 percent of its $28.9 billion in sales last year from its specialty tire businesses, predominantly from the OTR segment.
"This new facility will help us meet sustained demand while also attaining our growth objectives for 2015,” he said. Mr. Selleck added: “Nearly every earthmover tire is sold before it is produced.”
Michelin operates six other earthmover tire plants globally: Waterville, Nova Scotia; Campo Grande, Brazil; Le Puy and Montceau-les-Mines, France; Vitoria, Spain; and Zalau, Romania.
South Carolina Gov. Nikki Haley called Michelin “one of our finest corporate citizens” that has been “part of the economic and social fabric” of the state for decades.
The state is contributing $9.1 million in funding toward the project, according to Rich Kornacki, executive vice president, specialty tire lines for MNA, and Michelin will benefit from provisions from Anderson and Lexington counties allowing the firm to pay fees in lieu of taxes. The value of these deals is not yet determined.
Speculation about the expansion surfaced in February when it came to light that officials in Anderson County — where Michelin has two rubber-mixing/calendering facilities and more than 900 employees — were pitching the tire maker with an investment incentive package known as “Project Cougar.”
The package would provide tax relief and other incentives for creating at least 125 jobs and investing a minimum of $150 million, according to descriptions of the program. The incentives scale up with greater investment and more jobs.
At that time the tire maker declined to comment on its plans, saying: “Incentives such as those being considered by Anderson County pave the way for the potential of future investments down the road. While Michelin routinely considers a variety of business opportunities, we have nothing to announce at this time.”
Since then South Carolina media have reported on a number of other state and local agencies coming forward with investment incentive packages of their own.
The investment further cements Michelin's presence in South Carolina, where it operates four tire plants, the two rubber mixing/calendering units, its headquarters, a research-and-development campus and a test track in South Carolina, employing more than 7,700 in the state.
Overall, MNA has 18 plants in 16 locations throughout the continent, employing 22,270 and generating $7.25 billion in annual sales, according to company information.
In 2007 Michelin had budgeted $740 million for a car/light truck tire plant in Mexico to be built in 2008-10, but later it canceled the project in the wake of the global economic slowdown.
Capacity expansion projects of the past decade in South Carolina include:
- $200 million through early 2013 at its passenger/light truck tire plant in Lexington, S.C., to boost capacity, primarily for larger diameter performance tires for SUVs and crossovers;
- $90 million during 2008-09 to upgrade equipment and expand production capacity at its Lexington passenger and off-the-road tire operations;
- $110 million in 2007-10 to upgrade and expand its passenger/light truck and OTR tire plants in Lexington;
- $240 million in 2007-10 for increase capacity of semi-finished materials at plants in Sandy Springs and Starr and to add capacity for X One wide-base truck tires and military tires in Spartanburg County;
- $85 million in 2005-2010 to boost earthmover tire capacity at Lexington; and
- $80 million in 2005-07 to upgrade equipment and expand capacity at rubber materials plants in Starr and Sandy Springs.