SPARTANBURG, S.C.—Trelleborg Wheel Systems officially opened its first North American tire manufacturing plant in Spartanburg Jan. 27, touting its expanding commitment to the North American market.
The 430,000-sq.-ft. facility will produce radial agricultural tires, eventually in sizes ranging from 24- to 54-inch rim diameters, for both the OE and replacement markets.
Trelleborg is investing more than $50 million in the multi-phase project that converted a former Trelleborg A.B. coated fabrics facility to tire production.
Tire production actually started late last year, and the company said it will continue to add tire building equipment over the next couple of years. The facility is expected to employ 150 by 2018.
“The Spartanburg facility is one of the most automated manufacturing facilities in the agricultural industry. This enables us to guarantee the highest standard of production to customers across the North American market, which we are confident, will allow us to replicate the phenomenal ramp-up of our Xingtai facility in China,” said Paolo Pompei, president of agricultural and forestry tires at Trelleborg Wheel Systems.
“North America is the largest agricultural market in the world and it is highly attractive for us. Demand for extra-large agricultural tires, where Trelleborg is a market leader, 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,” Mr. Pompei said.
“We are now located in a modern facility in a prime location with state-of-the-art equipment designed according to the latest Trelleborg technology standards.
“This means we will be able to capitalize on existing partnership agreements with major original equipment manufacturers and distributors, while facilitating the transfer of technology from one part of the world to another.”
The plant features what Trelleborg claims to be the widest innerliner calender in the ag tire industry; fully automated body plies cutter; a fully robotized line for textile belts; and fully automated curing presses.
The U.S. represents the largest single market for Trelleborg A.B., where it reported corporatewide sales in 2014 of about $730 million. The tire maker has about 30 direct dealers and more than 1,000 indirect points of sale in North America.
There are three main reasons the Swedish company set its sights on establishing a tire plant in the U.S. market, according to Mr. Pompei:
c The U.S. is the biggest agricultural market in the world;
c Freight costs and import duties have increased, by up to 15 percent and as much as 100 percent respectively, along with currency fluctuations of as much as 24 percent; and
c North America is a market where radialization is growing year after year.
Currently it's at about 48-percent radial tire usage—providing “plenty of space” to improve the productivity of Trelleborg's customers.
He noted that the growing costs of importing tires into the U.S. market can be a business killer.
“This is why we don't believe in a strategy where we produce tires in one part of the world and we ship tires around the world. We don't believe this is going to be sustainable. We don't believe it's going to be stable. We don't believe this gives our customers the possibility to make long-term plans,” he told those gathered for the grand-opening event.
“This investment shows the clear commitment of Trelleborg to the expansion of our activities here in the region,” said Ulf Berghult, CFO of parent Trelleborg AB.
He pointed out that the facility “creates a growth platform for us in the U.S.” With the company's footprint in North America and its recent acquisition of Standard Tyres Group, a Brazil-based industrial tire manufacturer that strengthens its market share in South America, he said “more and more, Trelleborg is becoming a global force in the field of agriculture tires.”
“Later this year this will become even more obvious as the merger with the Czech company CGS becomes effective,” he added.
Trelleborg is awaiting government approval of its $1.25 billion bid to acquire CGS Holding a.s., the parent firm of Mitas a.s., which opened an ag tire plant in Charles City, Iowa, in 2012. Merger of the two companies would nearly double the annual revenue of Trelleborg Wheel Systems, potentially making it the largest ag tire and wheel producer globally.
The firm now operates four ag tire plants and two ag wheel plants around the world along with six R&D facilities and 20 distribution centers.
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