The world's major tire makers committed at least $8.6 billion in the past year toward new and expanded capacities and research capabilities, exceeding by about $600 million the total budgeted in 2012-13.
That amount of cap-ex spending ranks as the fourth largest 12-month total Tire Business has tracked over the past 21 years.
South Korean manufacturers Hankook Tire Co. Ltd. and Nexen Tire Corp. and India's Apollo Tyres Ltd. top the list of cap-ex spenders this year with billion-dollar-plus commitments. Hankook's $1.3 billion budget is for its car and light truck tire plant in Clarksville, Tenn., and a research and development center in Korea.
Nexen's spending of $1.1 billion is for the consumer tire plant it's planning to build in Slovak Republic, while Apollo has budgeted $1 billion for a plant in eastern Europe and modernizations in India. Possible locations for the European plant are still being evaluated, with sites in Hungary and Slovak Republic reportedly at the top of the list.
The spending announced in the past year was spread fairly evenly among the three major continents, with $2.77 billion committed to projects in Asia, $2.4 billion for Europe and $2 billion for North America, where Hankook Tire, Giti Tire Group, Kumho Tire Co Inc. and Trelleborg Wheel Systems have committed to building factories.
Goodyear is budgeting $500 million toward a new plant for the Americas, but the Akron-based tire maker has said repeatedly it won't make a final decision on location until late this year. Latin America, site of extensive investments in the past few years, got $77 million in specific spending in the past 12 months.
In the past year, tire makers announced 11 new tire plants that represent nearly 46 million units in new annual capacity for consumer tires and 4 million to 5 million for commercial tires to be brought on stream in the 2015-2018 time frame.
This is in addition to more than a dozen factories brought on stream in the past year that account for more than 50 million units a year of passenger/light truck tires and 5 million commercial/OTR units a year.
This contrasts with six announced plant closings by year-end 2015 representing about 10 million units of annual capacity for consumer tires and 4 million for commercial tires In terms of capital spending during fiscal 2013, Group Michelin and Bridgestone Corp.'s Tire Division were by far the biggest spenders, investing $2.63 billion and $2.62 billion, respectively, into their tire businesses. (See chart, page 10.)
Goodyear and Continental A.G. trailed at $1.17 billion and $1.06 billion, respectively.
On average, the tire makers profiled here invested 8 percent of sales into capital improvements in 2013, up slightly from 7.7 percent in fiscal 2012. Nexen Tire topped the list individually, investing 17.9 percent of sales in capital improvements, ahead of P.T. Gajah Tunngal at 15.2 percent and Maxxis International at 10.5 percent.
When it comes to research and development, Bridgestone and Michelin stand above the crowd in terms of pure spending on R&D and are among the leaders in terms of percentage of sales devoted to it.
On average the 20 companies for which spending data were available devoted 2.4 percent of sales toward R&D, up measurably from the 1.7-percent average in fiscal 2012. Michelin and Pirelli & C. S.p.A. both committed 3.2 percent of sales to R&D, ahead of Kumho Tire, Nexen Tire and Sumitomo Rubber Industries at 2.8 percnent. The major investments of the past 12 months, by company alphabeticially, are:
Alliance Tire Group
c $160 million to build a radial agricultural and construction tire plant in Dahej, Gujarat, India, with an estimated 50,000 metric tons of annual capacity, and expand capacity at its plant in Tirunelveli, India, nearly 30 percent to 84,000 tons of radial and bias-ply ag and construction tires and bias OTR and forestry tires.
Anhui HeDing Tires Technology Co. Ltd.
- $322 million for a passenger tire plant in Bengbu, Anhui Province, China, with a projected first-phase annual capacity of 4 million high-performance radials, rising eventually to 12 million. Apollo Tyres Ltd.
- $685 million over four years to build a car and truck tire plant in eastern Europe, with capacity for 16,000 passenger and 3,000 truck tires a day. Site selection is still under way.
- $340 million for modernization/expansion of two Indian plants—boosting capacity at a radial truck tire plant in Chennai nearly 50 percent to 8,900 units a day, and converting a bias-ply truck tire plant in Kalamassery to specialty/industrial tires.
- $57 million in its car and light truck tire plant in Bari, Italy, to upgrade the 52-year-old factory's tire-assembly machinery and restore capacity to 3.5 million tires a year. The factory earlier had been targeted for closure.
- $77 million through mid-2015 to expand capacity for plants in Camaçari, Brazil—boosting car and light truck tire capacity by roughly 25 percent to more than 10,000 tires a day —and doubling daily output of radial farm tires at Santo André, Brazil to 60 units by July 2015.
- $425 million in Vietnam to double the size of a passenger tire plant under construction near Hai Phong City to roughly 49,000 units a day. c $140 million to boost capacity for radial car tires at its Wuxi, China, plant by nearly 31 percent to about 22,600 tires a day.
Brisa Bridgestone Sabanci Las-tik Sanayi ve Ticaret A.S.
- $290 million for a passenger tire plant in Aksaray Province Organized Industrial Zone, Turkey, with capacity of about 13,000 units a day, due on stream by early 2018. Brisa is a joint venture between Bridgestone Corp. and Turkish industrial conglomerate Sabanci Holdings. Ceat Ltd.
- $104 million to expand car tire capacity at its 2-year-old plant in Halol, India, by about 80 percent to roughly 270 metric tons per day.
- $226 million to double capacity for truck and bus radials at its plant in Otrokovice, Czech Republic, to 1.5 million tires annually by 2018.
Cooper Tire & Rubber Co.
- The Findlay, Ohio-based tire maker is evaluating an investment of perhaps as much as $140 million to modernize its Tupelo, Miss., car and light truck tire plant, aided by up to $39 million in state and local funding.
- Plans to spend an undisclosed sum to build a passenger and light truck radial tire plant in Taoyuan, Taiwan, its second factory on that island nation. The plant is expected to have a nameplate capacity of 6 million units a year when it comes on stream in late 2016.
Giti Tire Group
- $560 million for a 1.8 million-sq.-ft. passenger/light truck tire plant and distribution center in Chester County, S.C., with a first-phase annual capacity of 5 million tires.
Hankook Tire Co. Ltd.
- $800 million for a car and light truck tire plant near Clarksville, Tenn., initial capacity of about 6 million tires annually by 2016, with about 1,800 full-time jobs at full capacity. A second-phase build-out will boost capacity to 11 million units a year by 2018.
- $240 million for a tire proving grounds and engineering center on a 1,420-acre site southeast of Seoul over the coming seven years.
- $260 million research and development center in Daejeon, South Korea, a million-plus-sq.-ft. facility that will house more than 1,000 scientists and engineers when it opens in 2016.
JK Tyre & Industries Ltd.
- $230 million to expand passenger and truck/bus tire capacity at its 3-year-old tire plant in Chennai, India, nearly 66 percent to 4.8 million radial tires a year. The expansion will boost employment 50 percent to 7,500.
Kenda Rubber Industrial Co. Ltd.
- $100+ million for a radial truck and bus tire factory in Kunshan, China, with an estimated daily capacity of 6,000 units when it comes on stream in 2016.
Kumho Tire Co. Inc.
- $413 million to restart construction of its delayed consumer tire plant in Macon, Ga., with a January 2016 production start-up being planned. The factory is expected to create 450 jobs. Annual capacity is expected to start at 3 million tires per year, with the potential for 10 million units longer term.
Maxxis International/Cheng Shin Rubber Co. Ltd.
- $320 million for a car and motorcycle tire plant in Karawang, Indonesia
- $80 million to $180 million to expand capacities at plants in Zhangzho (motorcycle and bicycle tires), Xiamen Jimei (passenger radials) and Chongqing (passenger radials), China. c $100 million to build a plant for motorcycle tires and automotive spare tires in Yunlin County, Taiwan.
- $138 million to support an expansion of agricultural tire capacity at its plant in Olsztyn, Poland, the scope of which was not disclosed.
- $33 million to $46 million to modernize and more than double capacity for bias and radial agricultural tires at its plant in Ruma, Serbia, to 35,000 metric tons by mid-2016.
Nexen Tire Corp.
- $1.1 billion for a passenger/light truck tire plant in Zatec, Czech Republic, with a capacity estimated at 6 million units annually and more than 1,000 employees. A second phase could double the project's size.
Shandong Linglong Tyre Co. Ltd.
- $115 million for a car and light truck tire factory in Thailand's Rayong Province with an expected annual capacity for 2 million car and light truck tires. c $182 million for a 365-acre tire proving grounds near Yantai, Shandong Province, China.
STARCO Europe A/S
- Plans to spend an undisclosed amount to expand its solid rubber tire plant in Sri Lanka beyond the original capacity of 80,000 tires annually.
Toyo Tire North America Inc.
- $161 million to expand capacity at its White, Ga., passenger/light truck tire plant by nearly 40 percent to about 8 million tires a year by 2017.
Yokohama Rubber Co. Ltd.
- $253 million for a passenger tire plant in Suzhou, China, on land adjacent to its existing truck/- bus tire plant there. The plant will open with a nameplate capacity of 6 million tires a year.
To reach this reporter: bdavis@ crain.com; 330-865-6145.
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