MEXICO CITY—Goodyear has selected a site in San Luis Potosi, Mexico, as the location of a car and light truck tire plant the company will build to supply markets throughout the Americas.
Goodyear has budgeted $500 million to $550 million for the plant, plans for which it disclosed in May 2014.
The plant will begin production by mid-2017, Goodyear said, with annual capacity of 6 million tires a year and 1,000 employees at full capacity.
The plant will focus on what Goodyear calls “high-value-added” or HVA tires, demand for which in the Americas is expected to grow by 10 million units a year through 2019, by which time they'll account for nearly three-fourths of demand vs. 62 percent currently.
Goodyear defines HVA tires as those that are 17 inches or larger in rim diameter, have reduced sidewall height, are at least H-speed rated, are made in segmented molds, use advanced tread compounding and/or incorporate extra-load constructions.
Goodyear Chairman and CEO Richard Kramer announced the selection at a ceremony April 24 in Mexico City with Mexican President Enrique Peña Nieto.
Mr. Kramer said Goodyear chose Mexico for the plant, its first new tire factory in the Americas in 25 years, because “San Luis Potosi is an ideal location....”
“Its central geographic location will enable us to support our valued customers and consumers throughout North America, Mexico and Latin America,” he added. “The new plant advances our strategy to serve the needs of our customers and is consistent with our focus on investing in high-return projects that drive profitable growth.”
The plant itself will be built in the World Trade Center Industrial complex, a business/industrial park south of San Luis Potosi proper that offers the largest intermodal terminal in Mexico, a customs office on-site and Free Trade Zone (FTZ) status. It is located near the most important highways and railroad lines in Mexico, also known as the NAFTA corridors, as well as the ports of Tampico, Altamira, Manzanillo and Mazatlan.
There are 20 other manufacturing ventures already situated at the site, including ABB and Valeo.
Goodyear said its selection of San Luis Potosi followed an extensive review of potential locations throughout the Americas, but the tire maker declined to identify any other specific sites. The review took into consideration factors including cost structure, logistics, infrastructure, skilled workforce, tariffs and quality-of-life issues.
San Luis Potosi is a community of about 1 million inhabitants in north-central Mexico, about 250 miles north of Mexico City.
Goodyear last produced tires in Mexico in 2001 before it shut its plant in Tultitlan, Mexico, which was rated at 20,000 tires daily. At the time Goodyear cited high costs as the reason for its decision to shut the plant.
The new factory will reflect Goodyear's commitment to the environment. It will be a zero-waste-to-landfill and zero-solvent facility, and it will use natural gas, energy-efficient LED lighting and state- of-the-art dust collection equipment, the company said.
Goodyear did not disclose the physical size of the site. Ground-breaking is scheduled for June. Goodyear declined to say what financial support Mexico and/or San Luis Potosi might be providing.
In a conference call with analysts on April 29, Mr. Kramer said customers in Latin America and North America view this investment as a “tangible sign of Goodyear's commitment to growth. It was a clear demonstration, to me, of the value of being a Goodyear partner.”
With the construction of its plant, Goodyear will become the seventh tire maker in Mexico, joining Bridgestone Corp., Continental A.G., Cooper Tire & Rubber Co., Group Michelin, JK Tyre & Industries Ltd. and Pirelli Tyre S.p.A. in that capacity. Continental's plant, opened in 1975, also is in San Luis Potosi.
Mexico is one of the few countries with which the U.S. has a positive balance of trade. Last year the U.S. exported $1.66 billion worth of tires to Mexico and imported $649 million, according to Tire Business' analysis of U.S. Department of Commerce data.
Mexico is a growing automotive power in the Americas. It's expected to overtake Brazil as the largest automobile producer in Latin America, according to consultant IHS Automotive. Mexico was projected to produce 3.1 million autos last year, IHS said, a level of production that would make the nation the seventh largest auto producer worldwide.
At the same time, market researchers Frost & Sullivan Inc. is forecasting 7.4-percent growth in demand for aftermarket tires in Mexico for the next three to five years. Frost & Sullivan put the size of the Mexican aftermarket last year at 22.7 million car and light truck tires and 3.2 medium- and heavy-duty vehicle tires, for a total value of $4.5 billion,
TechSci Research, in a separate study, is forecasting the value of the Mexican tire market to hit $8 billion by 2018, as personal vehicle ownership grows from the relatively low level of just 275 cars per 1,000 inhabitants in 2012.