Tire makers commit more than $7.3B on new plants, expansions

AKRON — The world's leading tire makers committed more than $7.3 billion in the past year toward new plants and capacity expansions, a measurable drop from record spending of $10 billion-plus in 2015-16 but still ahead of the annualized average for the past decade.

The investment sum was buoyed by nearly $3.3 billion in spending on acquisitions, deals that involved companies with collective annual sales of more than $2.5 billion — including Qingdao Doublestar Tire Co. Ltd.'s still-pending $830 million bid to buy what amounts to a controlling interest in South Korea's Kumho Tire Co. Inc.

The expansion projects collectively represent more than 80 million units of new passenger and light truck tire capacity and 7 million units of truck, bus and OTR tires per year.

This is balanced by only a couple of plant closures of note — Goodyear's car and light truck tire factory in Philippsburg, Germany (6 million units per year), and Giti Tire Group's truck tire factory in Chongqing, China (1.5 million units/year).

Among the investment announcements of the past year are eight new tire plant projects, including three in the U.S. — Nokian Tyres P.L.C.'s in Dayton, Tenn.; Qingdao Sentury Tire Co. Ltd.'s in LaGrange, Ga.; and Wanli Tire Group's in South Carolina.

Slightly more than half of the specific investments tracked by Tire Business are earmarked for expansions in Asia, with a third, or nearly $2.5 billion, budgeted for North America.

Wanli Group's $1 billion in declared investments — for the projected U.S. plant in South Carolina — qualifies as the top capital spending for the 2016-17 period.

Goodyear is a close second at $957 million. It would easily be considered No. 1 if it pulls the trigger on the pending $250 million project at its plant in Topeka, Kan.

Bridgestone Corp., China's Zhongce Rubber Co. Ltd. and Continental A.G. rank next at $654 million, $620 million and $600 million, respectively, committed to new plants and capacity expansions.

For fiscal 2016, the 20 leading tire makers tracked by Tire Business for this report devoted $10.9 billion toward capital expenditures, which was 6.9 percent of combined revenues, slightly up from the 6.6 percent recorded a year ago.

Individually, Apollo Tyres Ltd. and Brisa–Bridgestone Sabanci Tire Mfg. stood out among the others, devoting 27.8 and 15.2 percent of revenue, respectively, to capital improvements in fiscal 2016. Both companies were in the midst of building new factories, which skewed their data upward.

Continental, Group Michelin and Bridgestone spent the most in raw monetary value, at $2.76 billion, $1.93 billion and $1.72 billion, respectively.

Seventeen of the 21 companies that reported research and development spending had higher spending in 2016 vs. 2015. The industry average for fiscal 2016 stood at 3.5 percent, unchanged from the fiscal 2015 figure.

The averages vary from 0.2 percent for Ceat Tyres Ltd. to 6.9 percent for Continental, although Conti's average is skewed due to its sprawling automotive supply divisions. Conti's tire business-related R&D spending was 2.4 percent.

Individual expansion projects, by company alphabetically, include:

BRIDGESTONE

• $304 million to expand capacity at plants in Pune and Indore, India, over the coming five years. The projects will boost daily capacity nearly 60 percent by 2022 to about 41,000 tires and enable Bridgestone India Pvt. Ltd. to enhance the product mix.

• $150 million to build two aircraft tire plants in Thailand — one for new tires and one for retreading. Bridgestone did not disclose the location, size, capacity or expected employment for the plants.

• $180 million to upgrade capacity at its car and light truck tire plant in Wilson, N.C., to allow the plant to meet global demand for higher rim diameter tires, improve quality and productivity and reduce costs. The project will add 50,000 square feet to the 2.5 million sq.-ft. plant and raise capacity 9.4 percent to 35,000 units a day by 2018.

CONTINENTAL

• $294 million to boost capacity at its 6-year-old car tire plant in Hefei, China, by 30 percent to 20 million tires a year. The Phase 4 project will add 6 million units of annual capacity for passenger tires, Conti said. The new manufacturing area will cover more than a quarter of the Hefei site's 7.2 million sq.-ft. area. The factory's annual capacity will reach 20 million passenger tires and 5 million two-wheeler tires by 2022.

• $10 million to build an indoor tire testing center at its U.S. proving grounds outside Uvalde, Texas, to support the firm's vision of being the preferred technology partner for Continental's original equipment customers.

• $295 million for a car and light truck tire plant in Rayong, Thailand, with an initial annual capacity of 4 million tires and up to 900 employees. It is scheduled to open in 2019 with sufficient space for a potential expansion to up to 25 million tires per year, Conti said.

EURL SATEREX-IRIS

• $250 million to $300 million for a car and truck tire plant in Setif, Algeria, rated at 1 million car tires initially by 2018 and 2 million car and truck tires a year in Phase II. Finland's Black Donuts Engineering Inc. consultancy is aiding the Algiers, Algeria-based producer of electronic products and appliances. Finnish automation and materials handling company Cimcorp Oy is supplying machinery to the plant.

 GLOBAL RUBBER INDUSTRIES

• $40 million for a plant to manufacture pneumatic agricultural, industrial, OTR and construction tires in Badalgama, Sri Lanka. The 1.25 million sq.-ft. plant will have a rated capacity of 25 metric tons a day. All the products made at the new plant will be destined for export.

 GOODYEAR

• $485 million to expand annual capacity at its Pulandian, China, car and light truck tire plant to 5 million units, including capacity for tires with rim diameters of 17 inches or greater that are anticipated to account for nearly 60 percent of the tire maker's replacement tire sales volume in China.

• $162 million to add capacity for radial aircraft tires at its car and truck tire plant in Phathumthani, Thailand. The capacity would enhance existing bias-ply aviation tire capacity at the plant, which opened in 1969 and makes car, light truck and medium truck tires.

• $250 million (tentative) for "strategic investments" in its Topeka, Kan., truck and earthmover tire factory, according to the terms of a local financial incentive agreement.

GUIZHOU TYRE

• $245 million for a truck and bus tire plant in Vietnam, near Ho Chi Minh City, with an annual capacity of 1.2 million units. The 1.47 million sq.-ft. factory could be on stream as early as 2018. Guizhou — producer of the Advance and Samson brands and represented in North America by GTC North America of Canton, Ohio — said it expects the operation to generate $21 million annual profit on $149 million in sales.

HANKOOK TIRE

• Hankook envisions expanding its global manufacturing capacity more than 30 percent by 2020 and is considering five locations for a new plant, potentially Mexico, Brazil, the Middle East, East Europe and Russia. To accommodate growth, Hankook envisions expanding its collective production capacity to 135 million units a year by 2020, from 103 million units presently.

 HIXIH RUBBER INDUSTRY GROUP

• $690 million to cover projects at its Shenzhou Tyre and Tongli Tire Co. Ltd. subsidiaries in Jining, Shandong, China, to add annual capacity for 12 million passenger tires and 2 million truck/bus tires. The car tire expansion at the Shenhzhen Tire facilities will create 2,000 jobs and generate $110 million in annual sales. The truck/bus tire project will double the Tongli Tire factory's capacity to 4 million units a year, equivalent to annual revenue of roughly $370 million.

 JIANGSU FEICHI TIRE

• $30 million for an OTR production line at its plant in Xinyang Economic Zone, Yancheng City, China, with a projected annual capacity of 100,000 units.

 JIANGSU GENERAL SCIENCE TECHNOLOGY

• $23.5 million to add passenger tire capacity at its Wuxi, China, truck tire plant.

 GROUP MICHELIN

• $37.6 million to cover the start of production of new tire models at its Zalau, Romania, plant, targeted at the lower levels of the "intermediate" market segment and will include the Tigar brand. The new investment will create 100 jobs by 2021.

• $68 million through 2019 at its steel cord plant in Zalau to boost capacity there by 50 percent to 60,000 metric tons.

• $21 million to upgrade its Dundee, Scotland, plant for larger-sized tires and to reduce its environmental impact.

MRF LTD. 

• $70 million over 10 years for a new tire plant in Gujarat, India, covering MRF's full range of tires.

 NOKIAN TYRES

• $360 million to build an 830,000-sq.-ft. plant in Tennessee, rated at 4 million car and light truck tires a year, with production coming onstream by 2020. Employment will be 400 at full capacity. The project will include a warehouse for 600,000 tires.

• $92 million to boost capacity for car tires at its Vsevolozhsk, Russia, plant 10 percent to 17 million units.

 PILIPINAS AGILA TYRE PHILLIPINES

• $200 million for a plant, rated at 4 million tires a year, possibly in the Mindanoa region. The project involves the Philippines Rubber Farmers Association, the Philippine government, Phoenix Petroleum Philippines Inc. and Finnish tire engineering consultancy Black Donuts Engineering.

 PIRELLI TYRE

• $222 million to boost car tire capacity 50 percent — to 15 million units a year — at its plant in Slatina, Romania, by 2021 while also adding capacity for motorsports tires, especially for Formula 1. The project will add 580,000 square feet to the 2.26 million sq.-ft. plant and create 500 jobs over five years.

 QINGDAO FULLRUN TYRE

• $200 million for a plant in Malaysia, to be called "Jinma Rubber & Tyre Tech Corp. Ltd." No further details are available. FullRun Tyre is the producer of the Antyre, Autogrip, Carbon Series, Fullrun, Fullway, Highplus and Turnpike brands,

 QINGDAO SENTURY TIRE

• $530 million for a car and light truck tire plant in LaGrange, Ga., rated at 12 million tires a year and 1,000 employees at full capacity. Qingdao Sentury founded a new company, Sentury Tire North America L.L.C., to oversee the plant's construction and introduction of the Groundspeed brand.

SHANDONG LINGLONG

• $120 million for a tire research subsidiary in China.

• $120 million to add 800,000 units of annual capacity for radial truck tires at its Chonburi, Rayong, Thailand, plant, which is rated at 12 million units of radial passenger and 1.2 million radial truck tires and 400,000 bias-ply tires.

SHANDONG WANDA BOTO TYRE

• $275 million for a plant in Malaysia, in Jasin in that country's Malacca state. Tire types and capacity information was not disclosed.

SHANDONG YINBAO

• $190 million to add passenger tire capacity to the existing truck tire line at its Delun Rubber subsidiary's plant in Chuzhou, Anhui Province, China. The project will add 4 million car tires a year to the plant's capacities of 3 million truck and bus tires and 200,000 specialty tires. Shandong Yinbao lists GoodTyre, GoldTyre, Yinbao, Ginell and Taidelong as its brands.

• An undisclosed sum to set up a car and truck tire joint venture in Thailand with local tire makers N.D. Rubber Public Co. Ltd. and P.T. Siam Tyre Ltd. Local news reports indicated the plant should be operating by 2018 with capacity for 1.2 million truck and 3 million passenger tires annually.

SUMITOMO RUBBER INDUSTRIES

• $260 million to upgrade and expand capacity at its Hunan, China, factory 60 percent to 100,000 passenger tires a day by 2021.

• An undisclosed sum to open a technical center at its Tonawanda, N.Y., factory and revamp/expand its 70-acre U.S. test track in Huntsville, Ala., for use by four-wheel vehicles; the facility until now has been used solely for motorcycle tire testing,

TRELLEBORG WHEEL SYSTEMS

• An undisclosed sum for upgrades to the Ruma, Serbia, agricultural/industrial tire plant.

ZHONGCE RUBBER

• An undisclosed sum to add 3,000 to 5,000 units of daily capacity for bias industrial and motorcycle tires at its 2-year-old Zhongce Rubber (Thailand) Co. Ltd. plant.