AKRON — Tire makers worldwide budgeted more than $8 billion in capital expenditures in the past year toward new and expanded capacities, down from the record total of $10 billion in 2011-12 but still the fourth largest 12-month total Tire Business has tracked over the past 20 years.
Including Apollo Tyres Ltd.'s $2.5 billion bid to acquire Cooper Tire & Rubber Co. would push the total to a record $10.5-plus billion.
Group Michelin and Hankook Tire Co. Inc. top the list of spenders this year, each committing more than $1.5 billion toward capacity expansions and improvements, followed closely by Bridgestone Corp. with $1.1 billion.
Hankook's total, though, includes $1 billion toward a plant in the U.S., a project the South Korean tire maker is still studying. Executives said last November Hankook expected to be producing tires at the proposed plant before year-end 2015, but considering the time necessary to build a plant this timeline is starting to get squeezed.
Projects in Asia accounted for the largest chunk of the investments tracked by Tire Business — close to $2.8 billion — but companies also budgeted more than $2.3 billion for expansions at plants in Europe, and that total rises to $2.8 billion if Sumitomo Rubber Industries Ltd.'s plan for a joint venture plant in Turkey is included.
Proposed spending in China totaled about $1.4 billion, or roughly half the spending tracked for Asia.
Michelin accounts for more than $1 billion of the European investment, covering eight separate projects as the Clermont-Ferrand, France-based company steamlines and consolidates its sprawling manufacturing assets throughout France.
Expenditures targeted at North America totaled $1.8 billion — including the aforementioned $1 billion by Hankook. The Middle East/Africa accounted for the rest.
The projects monitored by Tire Business collectively represent nearly 160,000 units of new daily capacity for passenger and light truck tires, more than 6,000 units of daily truck tire capacity and roughly 60,000 metric tons of farm and other OTR tires annually.
This is offset by just 20,000 or so units of daily car/LT tire capacity being eliminated by four plant closings: Michelin factories in Algeria and Colombia and Marangoni S.p.A.'s in Italy;
In terms of capital expenditures made during fiscal 2012, Bridgestone's tire division and Michelin topped the list, investing $2.8 billion and $2.58 billion, respectively. Those sums represented 8.7 and 9.3 percent of the firms' respective sales, according to Tire Business' analysis of available data.
As for the "intensity" of spending, Taiwan's Maxxis International/Cheng Shin Rubber Co. Ltd. took top honors for devoting 15.6 percent of revenue to capital expenditures. It was joined in the double-digit club by India's MRF Ltd. and Finland's Nokian Tyres P.L.C. at 14.1 and 13 percent, respectively.
The top dozen or so tire makers on average invested about 7.7 percent of revenue on captial improvements in 2012.
Bridgestone and Michelin also topped the list of spending on research and development, spending $1.04 billion and $800 million, respectively, or 2.7 and 2.9 percent of sales. Pirelli & C. S.p.A. spent the most, percentagewise, on R&D in 2012, devoting 3.2 percent of revenue.
The average spending on R&D by the top makers was 1.7 percent last year.
R&D projects accounted for $670 million of the $8 billion in capital expenditures, as Bridgestone, Cooper Tire, Hankook, and Michelin all committed to improvements in the area.
By company, listed alphabetically, the projects disclosed in the past year are:
* $375 million for a passenger radial plant in the Zavolzhye Industrial Zone in Russia's Ulyanovsk Oblast region. The plant is scheduled to come on stream in the first half of 2016, with a rated capacity of 12,000 units a day, predominantly winter tires. Employment at full capacity in 2018 will be 800.
* $300 million to relocate its 18-year-old Bridgestone (Shenyang) Tire Co. Ltd. truck tire plant to a larger site in a Shenyang, China, industrial park and boost capacity by a third to 5,000 tires daily. The plant should be in operation before year-end 2014.
* $346 million to triple daily capacity at its radial car tire plant in Tatabanya, Hungary, by the first half of 2017 to 18,000 units.
* $27.3 million to boost capacity for bias-ply OTR tires by an undisclosed amount at the Bridgestone Americas plant in Bloomington, Ill.;
* $42 million for a technical center in Bangkok to cover development work for the firm's activities throughout Asia/Pacific. The center opened in August with 100 employees.
* $67 million for a bias-ply light and medum truck tire plant in Bangladesh, in partnership with A.K. Kahn & Co. Ltgd., a diversified Bangladeshi industrial and trading firm. The plant is rated at 65 metric tons per day at start-up, set for late 2014, and 110 tons per day in Phase II, the partners said.
MAXXIS INTERNATIONAL/ CHENG SHING RUBBER
* $150 million for a tire test proving ground adjacent to its Maxxis International tire plant in Kunshan City. The site covers 9.2 million square feet and comprises separate courses for testing tire performance at high speeds, braking, dry and wet handling, pass-by noise, ride, durability and noise, vibration and harshness.
* $16 million for an indoor, automated brake test facility at its Contidrom tire proving ground near Hannover, Germany, offering driverless testing of braking performance on a variety of surfaces, including ice.
* $129 million to boost capacity for truck tires, including wide-base singles, at its Mount Vernon, Ill., plant by mid-2015; the project will raise annual capacity to about 3.2 million units and create more than 100 jobs, Conti said.
* $135 million over several years to add 400,000 units of annual truck tire capacity at its Puchov, Slovak Republic, plant to address growing demand in Europe, the Middle East and Africa. The investment is in addition to a project under way to boost car and light truck tire capacity at Puchov 45 percent to 16 million units per year.
* $40 million over five years to build a global technical center in Findlay, Ohio, where it will house as many as 40 new hires.
* $550 million through year-end 2018 to expand its passenger and truck tire business to approximately 12 million tires per year.
DA NANG RUBBER
* $141 million for a 1.1 million-sq.-ft. radial truck tire plant in Da Nang, Vietnam, rated at 600,000 units per year at start-up with 1,000 employees.
* $400 million over two years to to boost capacity for car and light truck tires by 42 percent at its plant in Rácalmás, Hungary, to 17 million tires a year and create 950 additional jobs.
* $133 million for a 1 million-sq.-ft. dedicated research and development facility in Daejeon, South Korea, which should allow the company to accelerate its development of "cutting-edge" tire technology.
KENDA RUBBER INDUSTRIAL
* An undisclosed sum to increase its global production capacity for passenger car tires by 50 percent in order to meet rising market demand. The production boost will translate to 38,000 units a day by year-end, according to the tire maker.
Kenda said it plans to raise its capacity in Taiwan by 4,000 units a day. The company's new plant in Tianjin, China, is expected to increase capacity by 5,000 tires a day by year-end, while its new factory in Shanghai will increase its production by 2,500 tires a day.
Currently, the tire maker produces 22,500 tires daily in its Kunshan, China, plant and 4,000 units a day in its Yunlin, Taiwan, facility.
* $46.3 million through mid-2013 for a 258,240-sq.-ft. plant in Otrokovice, Czech Republic, for radial farm tire production at a capacity of 42,000 metric tons per year. The company laid the cornerstone there Sept. 26 and plans to move production there from Conti's Otrokovice plant.
* $435 million through 2017 for a synthetic rubber (SR) plant in Ciwandan, Indonesia, in partnership with with P.T. Petrokimia Butadiene Indonesia (PBI), a local producer of butadiene. Michelin will own 55 percent of the as-yet unnamed joint venture company, which will oversee the project.
The partners did not say which type or types of SR would be produced nor what the factory's planned capacity would be. PBI's parent, P.T. Chandra Asri Petrochemical Tbk., however, already produces styrene, which together with butadiene are the building blocks for styrene-butadiene rubber, the key tire polymer.
* $200 million through mid-2014 to expand rubber compounding capacity at its Starr plant to support tire manufacturing capacity expansions under way at other Michelin plants in South Carolina.
* $73 mllion over four to five years to expand capacity for wide-base truck tires at its Waterville, Nova Scotia, plant, an expansion that should create about 50 jobs at the 31-year-old factory. The project will involve adding 32,280 square feet to the plant.
* $290 million in the research and development center in Clermont-Ferrand, France, to "maximize our power of innovation and shorten development";
* $343 million toward general improvements across all of its French operations;
* $190 million to improve OTR tire production at plants in Montceau-les-Mines and Le Puy-en-Velay, France—$125 million through 2019 at the 44-year-old plant in Montceau to expand annual capacity 40 percent beyond the 21,000 metric tons listed there and add 160 jobs, and $66 million to boost capacity at Le Puy by a third, creating 90 jobs.
* $160 million to consolidate truck tire capacity at Joue-les-Tours at the truck tire plant in La Roche-sur-Yon.
* $132 million at a truck tire plant in La Roche-sur-Yon to accommodate the consolidation of production by mid-2015 from a plant in Joue-les-Tours by mid-2015, where tire production will be phased out and the plant converted to semi-finished tire components. These measures will eliminate 710 of the plant's 930 jobs but create 170 jobs at La Rache. That, in effect, will double capacity at La Roche to 1.6 million units a year.
* $59 million to boost capacity for semi-finished products at Mont¬ceau-les-Mines, France, creating 64 jobs.
* $11 million to modernize the Troyes, France, agricultural plant and increase production by an undisclosed amount.
MYANMAR ECONOMIC CORP.
* $200 million (estimated) for a multi-purpose plant in Yangon City, Myanmar, the first tire factory in the former Burma. The plant, which opened in July, has capacity for radial passenger and truck/bus tires along with other miscellaneous bias tires, inner tubes, liners and bladders. The 1.5 million-sq.-ft. plant, operating under the name Myanmar Economic Corp. Tyre Factory, will have an estimated annual capacity of 855,000 units. The company will produce and sell under the Tristar brand.
* $200 million through 2014 at its plant in Yanzhou, China, to more than double annual capacity for car tires to 10 million units and boost truck tire capacity more than 20 percent to 850,000 units, making the plant Pirelli's largest worldwide.
The company also has recently installed annual capacity for 1 million motorcycle tires at the plant.
* $136 million over the coming five years to expand capacity more than 50 percent for premium tires at its 6-year-old car and light truck tire plant in Slatina, Romania, to 13 million units annually by 2017.
The project will involve expanding the size of the plant about 11 percent to 2.35 million square feet and will create 500 jobs at the plant, raising employment there to 3,500 by 2017, Pirelli said.
* $44 million to buy a 15-percent stake in the Moscow joint venture entity that owns the Kirov and Voro¬nezh, Russia, tire plants. The purchase will raise Pirelli's share to 65 percent from 50 percent, according to Russian Technologies State Corp. (Rostec), one of the venture's partners.
SAILUN TIRE CO. LTD.
* $100 million for a plant in Vietnam, in Tay Ninh province near Ho Chi Minh City, will produce passenger and light truck tires. It is scheduled to begin production in the coming months and be up to commercial-scale production before year-end.
SHANDONG LINGLONG TYRE
* $115 million to a car and light truck tire plant in Rayong Province, Thailand, with an expected capacity of 2 million car and light truck tires annually, with production expected to start by June 2014.
SUMITOMO RUBBER INDUSTRIES
* $500 million over three years for a radial car and light truck tire plant in Cankiri, Turkey, in a joint venture with Abdulkadir Özcan Otomotiv Lastik, the parent of Turkish tire maker Petlas Tyre Industry & Trade Co. and the importer/distributor of Toyo-, Hankook- and Maxxis-brand tires. The plant is due on stream in 2015 and will reach nameplate capacity of 30,000 tires daily by year-end 2019, with about 2,000 employees.
* $126 million for a radial agricultural tire plant in Amata City, Thailand. The 1.4-million-sq.-ft. factory, SRI's first for farm tires outside of Japan, slated to begin production in May 2014, with a nameplate monthly capacity of 800 metric tons, or 50,000 tires, that should be reached by 2017.
* $15 million to install capacity for radial motorcycle tires at Amata City factory, in response to growing demand in Asia for tires for full-size motorcycles. The new capacity of 64,000 tires per month should begin production by January 2015.
* $60 million to buy from Apollo Tyres the rights to the Dunlop brand throughout Africa and Apollo's car and light truck tire plant in Ladysmith, South Africa.
* $400 million for 7 million sq-ft. factory in Heze City, Shandong, China, capable of 2 million passenger and light truck tires annually, expanding to 5 million by 2015. Employment at start-up was 520.
TOYO TIRE & RUBBER
* $210 million to boost annual capacity 38 percent for car and light truck tires at its White, Ga., tire plant to 8 million units by mid-2015 and add nearly 475,000 square feet to the 9-year-old factory.
* $300 million for a medium truck and bus radial plant in West Point, Miss., capable of producing 1 million tires annually by 2015 and eventually up to 4 million units.
* $82 million to double capacity by late 2015 for radial truck tires at its plant in Rayong, Thailand, The plant will reach its annual capacity of 350,000 units by year-end 2015, the company said.
To reach this reporter: [email protected]; 330-865-6145.