JACKSON, Miss.—Citing its belief that demand for its commercial tire products in North America will continue to grow at above market pace, Continental A.G. is committing $1.4 billion over the next several years to build a truck/bus tire plant in Mississippi.
Nikolai Setzer, Continental's executive board member for the tire business, said Conti's commercial sector business growth in North Amercia “has consistently exceeded the market over the last five years and the company continues to see customer demand for its products — both new truck and bus tires as well as retreads...growing beyond the company's existing capacity.”
Continental's truck/bus tire market share in North America is estimated at roughly 7 to 8 percent, counting the Continental and General brands together, according to Tire Business estimates.
Conti anticipates breaking ground in the next several months on the plant at a site in Hinds County, Miss., 20 miles west of Jackson along Interstate 20. The state will purchase the site—said to be roughly 900 acres—and subsidize part of the plant's construction, according to various media reports.
Production is planned to start by year-end 2019, Conti said, without disclosing the factory's expected capacity. Employment is expected to reach 2,500 at full capacity, sometime in the 2020s.
By comparison, Yokohama Tire Corp.'s year-old truck tire plant in West Point, Miss., is rated at 1 million units a year at full capacity with 500 employees, and Conti's existing truck tire plant in Mount Vernon, Ill., has a rated capacity of 3.2 million truck tires and more than 13 million car/light tires a year with 3,000 employees.
Conti and the state of Mississippi have been in discussions about the possibility of locating a plant there for more than two years, according to Mississippi Gov. Phil Bryant. “The positive impact this manufacturing plant will have on the region, the state and our automotive industry will be felt for many years to come,” he said. “I look forward to the company's success and longevity in Hinds County.”
Gov. Bryant called an extraordinary session of the Mississippi legislature on Feb. 4 to approve amendments to the Mississippi Code of 1972—also known as the Mississippi Major Economic Impact Act—to provide for financial assistance and/or tax breaks for an industrial project of this nature.
“The company's decision to bring 2,500 new jobs to central Mississippi speaks volumes about our dedication to developing the workforce of the future,” Gov. Bryant said, “as well as a business environment that spurs growth, expansion and innovation.”
Mr. Setzer said the project is part of Conti's global growth strategy and a “first step” in addressing the firm's commitment to grow its CV tire business in North America.
Paul Williams, executive vice president, Continental Commercial Vehicle Tires, the Americas, said the project likely will include a distribution center, and the property would be large enough to accommodate passenger tire capacity at a later date if deemed necessary.
According to an Associated Press summary of financial assistance measures being mustered to support Conti's decision to build its plant in Mississippi, state, regional and local governments are committing approximately $600 million in aid to the project.
The biggest single measure will be $263 million in bonds that the state and Hinds County will borrow to cover purchasing the site and preparing it for construction.
Conti also will be given franchise, property and income tax breaks valued at more than $300 million by a number of sources.
The Hinds County plant will be Conti's third in the U.S. and sixth in the Americas.
The German tire maker is in the midst of a $500 million project to double capacity of car and light truck tires at its 3-year-old plant in Sumter, S.C., and is wrapping up work at its Mount Vernon factory complex on a five-year, $224 million investment to raise capacity, including output of wide-base single truck tires.
At the ground-breaking for the Sumter plant in March 2012, company officials indicated there was sufficient room at that 330-acre site to accommodate truck tires alongside passenger and light truck tires. Conti's initial investment in Sumter was $500 million.
Conti also has tire plants in San Luis Potosi, Mexico; Camacari, Brazil; and Cuenca, Ecuador.
The company recently disclosed that it would begin selling OTR and farm tires in North America this year as part of a global effort to expand sales in those product areas.
The tire maker also has been building its companion ContiLifeCycle retread business steadily the past few years in North America. To date Conti has 10 licensees in the U.S. and two in Canada along with five plants in the U.S. under its BestDrive L.L.C. subsidiary.
In prepared remarks issued ahead of a Feb. 8 signing ceremony in Clinton, Mr. Bryant thanked Mr. Setzer and the entire Continental team for choosing to invest in Mississippi and its citizens.
In return, Mr. Setzer thanked the state of Mississippi, Hinds County and the city of Clinton and Mr. Bryant for his leadership in bringing the project forward.
“...(W)e look forward to a strong business relationship for years to come,” Mr. Setzer added.
Mr. Williams said, “As we plan our growth, we have found this site provides significant advantages for a future tire plant in terms of its large skilled workforce, as well as its ideal location and infrastructure.
“The state of Mississippi has developed an outstanding business climate and this site met all of our needs for projected growth in the near as well as in the longer term.
“We look forward to providing well-paying jobs with excellent benefits to the people of the Jackson area within the next few years.”
State officials said the jobs at the plant would average $40,000 in annual salary.
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