SAN LUIS POTOSÍ, Mexico—Goodyear broke ground July 28 at a formal ceremony for the first plant it will build in the Americas in a quarter of a century.
The 23.7-acre plant, representing an investment of up to $550 million, will be built on a 94-acre plot of land in an industrial zone on the southern edge of the city of San Luis Potosí in central Mexico. The cornerstone will be laid in November and the facility will be operational by July 2017, Martin Rosales, president and managing director of Goodyear Mexico, told dignitaries.
Speaking at the ceremony, Jean-Claude Kihn, president of Goodyear Latin America since November, said the plant will have an annual production capacity of 6 million high-value-added tires, such as the Eagle F1 and Wrangler All-Terrain Adventure with Kevlar.
Mr. Rosales told Tire Business separately that Goodyear has signed an agreement with the CTM trade union, which will offer its representation to the plant's 1,000 blue-collar workers—most of whom will be local people.
The CTM—Confederación de Trabajadores de México—was founded in 1936 and was once notorious for its belligerence. However, CTM-led strikes are a rarity today.
Asked for details of any financial incentives that Good-year may have received from Mex--ico's federal, state and/or municipal governments to support its investment in a plant in Mexico, Mr. Rosales demurred before stating that infrastructure, including railroads, highways and inland customs services, and the “seriousness” of Mexican authorities were more important than financial incentives.
“These (financial incentives) are always short term,” he said. “Infrastructure is long term. This is much more important than a fiscal incentive.”
The San Luis Potosí plant is known within Akron-based Goodyear as the “Americas Project.” Asked specifically whether Good-year has plans to expand the facility over time, Darren Hayes-Powell, the project director, told Tire Business: “We have some capabilities to expand it, but it depends on the market.
“For us, this is the first plant we (will) have built in the Americas for 25 years. It's something we are really very excited about.”
Mr. Hayes-Powell said San Luis Potosí is “really a Mexican plant, but it can supply the rest of Latin America and North America.”
According to Goodyear, light vehicle production in Mexico increased to 3.6 million a year between 2010-2015 from 2.2 million—”and it's estimated it will grow to 5 million by 2020.”
The number of light vehicles on the road rose to 17 million today from 15.5 million in 2010 and is likely to reach 19 million in 2020, the tire maker added.
Goodyear already has five tire-manufacturing plants in Latin America—one each in Brazil, Chile, Colombia, Peru and Venezuela. It operated a plant in Mexico, in Tultitlán, a dozen or so miles outside Mexico City, for 60 years, but shut it down in 2001 “because its high costs are incompatible with current economic conditions,” the firm said at the time.
Mr. Rosales said when Goodyear decided to return to Mexico three years ago, five states, including San Luis Potosí—which is 260 miles northwest of Mexico City—met all the requisites. “Every one of them had what we had been looking for over a period of 10 months,” he told Tire Business.
General Motors Co. has a car assembly plant in the city while BMW A.G. plans to start assembling 150,000 vehicles a year at a $1 billion plant it is building there in 2019.
Stephen Downer is a Mexico-based freelance writer who covers that country and Latin America for Tire Business and its Latin America e-newsletter.