SPARTANBURG, S.C.—Add Trelleborg A.B.'s name to the club of U.S. tire makers.
The diversified Swedish polymer specialist will invest $50 million through 2018 to convert a factory it operates in Spartanburg—where it makes coated fabrics used in the printing industry—to production of agricultural tires.
Tire production is scheduled to begin by the second half of 2015, Trelleborg said, without disclosing the plant's expected capacity. Trelle-borg said the plant will span 430,000 square feet but didn't say how much of that represents new construction. The plant will employ 150 at full capacity, Trelleborg said.
The investment reflects the company's desire to create a platform for local presence and growth in North America, where last year Trelleborg generated $148 million in tire- and wheel-related sales.
“North America is the largest agricultural market in the world and it is highly attractive for us,” said Maurizio Vischi, president of the Trelleborg Wheel Systems business area.
“The market for extra-large agricultural tires...is growing in the region. Although we already sell our products in the U.S. and Canada, local production offers considerably more favorable conditions, thus enhancing our competitiveness. An expanded presence in North America is central to our growth strategy.”
Trelleborg will be getting some tax breaks and “job development credits” from the state of South Carolina and Spartanburg County for the agricultural tire plant it plans to build near Spartanburg, but the value of these incentives will depend on the extent and speed of the project, officials said.
Trelleborg did not say what relocating this production will cost.
Regarding state aid, the South Carolina Department of Commerce said the job development credits for which Trelleborg is eligible are “discretionary, performance-based” incentives that rebate a portion of new employees' withholding taxes once a company creates the positions they have committed to create.
The state's Coordinating Council for Economic Development will oversee these credits.
At the county level, Trelleborg will receive offsets to property taxes, the value of which will depend on the final value of the project and how quickly it ramps up, according to R. Carter Smith, executive vice president of Economic Futures Group, the county's economic development organization.
The production will be located at a plant in Spartanburg operated by Trelleborg Coated Systems US Inc., a maker of coated fabrics used in printing blankets and similar products.
Production of these products is being transferred to other Trelleborg plants in North Carolina and Tennessee, freeing up the facility for tire production.
Tire production will focus on sizes and products engineered for North America, a company spokesman said, including OE supply to the leading makers of farm and forestry equipment.
“We are already a leading global supplier of premium tires for agricultural machines and we now intend to consolidate this position through production in North America,” Mr. Vischi said, “with proximity to both existing global customers as well as a potential expanded customer base.
“We are building up specialty production of agricultural tires in a modern facility in a prime location, and we are also capitalizing on existing partnership agreements with major original equipment manufacturers and distributors, facilitating the transfer of technology from one part of the world to another.”
This will be Trelleborg Wheel Systems' ninth tire and/or wheel plant worldwide, including a factory in Red Lion, Pa., for solid industrial tires. The company's other agricultural tire plants are in Tivoli, Italy, and Xingtai, China, both of which Trelleborg acquired.
The Tivoli plant originally belonged to Pirelli & C. S.p.A., while the Xingtai plant was built by Maine Industrial Tire Co.
Its American sales unit, Trelleborg Wheel Systems Americas Inc., the business's sales unit for the Americas, recently moved its U.S. headquarters to southeast Akron—site of its primary Ohio distribution center—from the west Akron suburb of Fairlawn, where it had been since late 2010.
The firm said the move consolidates North American sales, marketing and logistics personnel of the ag and industrial tire businesses at one location, which also includes warehousing.
With the announcement of the plant in Spartanburg, however, it's expected the business' agricultural tire sales and marketing personnel will relocate to South Carolina.