Global tire investments increase by $2 billion

Tire makers around the globe committed nearly $7 billion over the past year toward new factories and capacity expansions; more than three-fourths of which is earmarked for projects throughout Asia.

The total is roughly $2 billion greater than the amount tracked by Tire Business during the August 2019-August 2020 period and includes investments for three greenfield tire factories.

Combined, the new factories and expansions represent more than 58 million units of new annual production capacity — 53.5 million passenger and 6.5 million truck/bus tires — as well as more than 100,000 metric tons of new capacity for farm, industrial and OTR tires.

• This story originally ran in the Aug. 30, 2021, print edition of Tire Business. Subscribers may download the digital edition here.

At the same time, tire makers closed or prepared to close four factories, representing just over 19 million units in annual capacity.

Giti Tire Group, Linglong Tire and Sailun Group lead the list of those with expansion projects, committing $1.2 billion, $946 million and $945 million, respectively.

In terms of funds spent in fiscal 2020 on capital improvements, the world's two dozen leading tire companies scaled back across the board, dropping their cap-ex spending last year to 6.4% of sales, down from 7.4% in 2019 and 7.6% in 2018.

Of the 24 top companies that provided such information, only one — Turkey's Brisa Bridgestone — increased its cap-ex spending in fiscal 2020. All of the others reported double-digit drops.

Sailun Group Co. Ltd., Nokian Tyres P.L.C. and MRF Ltd. devoted the highest percentage of revenue to cap-ex — 11.5%, 11.4% and 10.6%, respectively.

Spending on research and development dipped slightly as a percentage of revenues in 2020 among the 21 leading tire makers for which R&D figures were available.

On average, the companies devoted 4% to R&D last year, down from 4.2% the year before. This figure is skewed, however, by Continental A.G., whose automotive divisions have measurably higher R&D budgets than the tire business units. Conti's overall R&D spending percentage is 9%, while the tire units devote just 2.6% of sales to R&D.

Factoring that out, the industrywide percentage drops to 2.9%.

Major expansion projects announced in the past year, shown alphabetically by company, include:

Apollo Tyres Ltd. upgraded production capabilities for agricultural tires at its factory in Enschede, Netherlands, in response to growing demand from customers in Europe and North America for larger tires, up to 42 inches in rim diameter. The investment sum was not disclosed.

Balkrishna Industries Ltd. (BKT) — $257 million to increase capacity at plants in India, including its large OTR factory in Bhuj and a new factory being built in Waluj.

The investment package calls for $108 million to boost output of 51- and 57-inch OTR tires at the factory in Bhuj, by 50,000 metric tons per year, and $88 million to expand its capacity for carbon black by nearly 75% to 200,000 metric tons per year at the Bhuj factory complex; and $60 million for modernization, automation and technology upgrades at the Bhuj and Rahasthan factories.

Bridgestone Corp. — $274 million for projects in Brazil, Japan and the U.S:

• $140 million to modernize and expand capacity at its car and light truck tire plant in Camaçari, Bahia, Brazil, by over 20% to 11,750 units a day. The project is designed to help meet increasing demand for high-tech and premium tires in the country and to support "important" gains in market share in South America.

• $94 million over four years to make its Shimonoseki, Japan, off-the-road tire plant "greener" in terms of renewable energy use and cleaner handling of waste water. The investment, which will start in 2022 and run through year-end 2025, reflects goals set forth in Bridgestone's longer-term strategic growth strategy, which are part of the firm's Mid-Term Business Plan.

• $40 million over three years to boost capacity 3% at its radial truck/bus tire plant in Warren County, Tenn., to 9,400 tires per day.

Continental A.G. — an undisclosed sum to boost capacity for truck and bus tires at its Modipuram, India, plant by up to 30% over the coming 18 months, in part to satisfy rising demand in the Asia-Pacific region. The expansion project will focus on capacity for 20- and 22.5-inch rim diameter radials, Continental said, at the factory it acquired from Modi Rubber Ltd. in 2011.

Capacity at the plant, which opened in 1974 and makes car. light truck and farm tires as well, is listed at 500,000 units annually.

Giti Tire Group — $1.2 billion to relocate its tire plant in Hefei, Anhui Province, to a site in Changfeng county in the same prefecture, in response to complaints over environmental issues. Construction of the new plant should be completed by year-end 2026.

When in full operation, the park will be able to produce more than 20 million passenger tires and more than 2.6 million truck and bus tires annually.

Global Rubber Industries Pvt. Ltd. (GRI) — $100 million to quadruple annual capacity for specialty tires at its 3-year-old factory in Badalgama, Sri Lanka, to 100 metric tons per day, with a focus on agriculture tires. The project will nearly double the plant's physical size to over 240,000 square feet and double employment to around 500.

GRI also is building a rubber mixing facility in the Mirigama Export Processing Zone in Sri Lanka to support the firm's ongoing tire capacity expansion projects.

Hankook Tire & Technology Co. Ltd. —$85 million to expand capacity for passenger/light truck tires at its 4-year-old tire plant in Clarksville, Tenn., in part to accommodate production of some tire types being transferred from plants in South Korea. The expansion will boost capacity at the plant by 4.5 million to 5 million tires a year by year-end 2023 or early 2024,

Jiangsu General Science Technology Co. Ltd. (JGST) — $674 million for new factories in China and Cambodia:

• $472 million for a plant in Anqing, Anhui Province, China, initially for truck/bus tires but with capacity for passenger tires to be added later. The project calls for a Phase One rated capacity of 1.2 million truck/bus radials by the latter half of 2022, with Phase Two, for 9 million units of annual car tire capacity, to take up to 26 months to complete.

• $202 million to build a tire plant in Cambodia, expected to be operational by September 2022 with a rated capacity of 6 million passenger tires a year. A new company, General Rubber (Cambodia) Co. Ltd., is being set up to oversee the project, to be located in the Sihanoukville Special Economic Zone (SSEZ), in southwest Cambodia.

Kumho Tire Co. Inc. — $328 million to boost capacity at car and light truck tire plants in the U.S. and Vietnam, including a doubling of capacity at its factory in Ben Cat, Vietnam, in response to growing demand in North America.

In the U.S., Kumho is budgeting $23 million to boost capacity at its Macon, Ga., factory by 550,000 units a year by year-end 2022 to nearly 3.9 million units a year.

In Vietnam, Kumho plans to spend $305 million over two years to boost the 13-year-old plant's capacity to 9.3 million units a year, versus 3.8 million in its current form.

Linglong Tire — $945 million for a radial truck tire factory in the central China province of Shaanxi, with projected annual capacities of 15.2 million "semi-steel and all-steel" radial tires and 500,000 retreaded tires.

Construction is expected to start in April 2022 and be completed in three phases by March 2028. It will be Linglong's sixth factory in China.

The move is part of the company's global expansion strategy, which it revised recently to a "7+5" format — seven plants in China and five globally — from the "6+6" strategy it had been pursuing the past few years.

J.S.C. Nizhnekamskshina — $270 million for a Phase II expansion of production capacity for all-steel radial truck tires by 75% at its plant in Nizhnekamsk. The project will boost capacity there to 2.8 million truck tires and 33,000 units of annual capacity for large agricultural and industrial tires.

Sailun Tire Group — $946 million to build, expand and refurbish factories in China, Cambodia and Vietnam.

In Cambodia, Sailun is committing $338 million to build a car and light truck tire factory in that nation's Svay Rieng Province, scheduled to go on stream by 2023/24 and rated at 9 million units a year at full capacity. The new plant will be Sailun's fifth factory worldwide and second outside of China.

In Vietnam, Sailun plans to expand capacities for car, truck and OTR tires at its 7-year-old plant there in response to rising demand from customers in the U.S. and Europe.

The project is budgeted at $462 million over three years and will boost annual capacity at the plant by 3 million passenger tires, 1 million truck/bus tires and 50,000 metric tons of OTR tires, Sailun said.

Separately, Sailun commissioned production early in 2021 at a refurbished radial tire plant in Weifang, Shandong Province, that previously belonged to Anchi Tyres. Sailun acquired the facility in January and budgeted $130 million to upgrade it into a smart factory. It completed the project two months ahead of schedule.

Located in the Weifang's Zhucheng Economic Development Zone, the plant is rated at 6 million passenger and 1.5 million truck/bus tires a year, Sailun said.

Sumitomo Rubber Industries Ltd. — $425 million over three years to increase capacities at plants in Brazil, Japan, Thailand and the U.S.

The project in Brazil, budgeted at $200 million, will boost capacity for passenger car and light truck tires at the plant in Fazenda Rio Grande, Paraná, Brazil, nearly 28% to 23,000 per day by April 2024.

Additionally, the factory will also double capacity for medium truck and bus tires to 2,200 per day by April 2025, up from the current 1,000 per day.

In Asia, SRI has budgeted $102 million to expanding capacity for tires for light truck and SUV applications at plants in Amati, Thailand, and Miyazaki, Japan. SRI aims to produce 4,150 of these tires per day by year-end 2023 at the Thai plant in Amati City and 1,600 units/day at the Miyazaki plant by year-end 2024.

In the U.S., SRI will invest $122 million over three years to increase capacity for car, light truck and medium truck tires at its factory in Tonawanda, N.Y., in response to increased demand. SRI is budgeting $96 million to nearly double capacity for car and light truck tires to 12,000 units a day by year-end 2023, as well as $26 million through year-end 2024 to raise truck tire capacity 31.4% to 2,300 tires a day.

TVS Srichakra Ltd. — $135 million over three years to expand capacity for two- and three-wheeler and OTR tires at plants in Madurai and Pantnagar, India. The investment project will result in a 25% to 30% increase in capacity for two- and three-wheel tires and a doubling of capacity for off-highway tires, the Madurai-based company said.

Yokohama Rubber Co. Ltd. — $336 million for an off-the-road tire plant in India's Andhra Pradesh Province, due on stream by 2023. The plant, which will have a rated capacity of 123 metric a day of OTR tires by 2024, is under construction at a site near Visakhapatnam, India, a port city on the Bay of Bengal about 500 miles north of Chennai.

The plant, to be operated by Yokohama's Alliance Tire subsidiary, will be its third OTR tire factory in India and eighth worldwide.

Zhongce Rubber Group (ZC Rubber) has broken ground on an additional expansion of capacity at its manufacturing complex in Rayong, Thailand, as part of an ongoing investment program at the site.

The new project — comprising a separate factory structure spanning over 609,000 square feet of floor area — will complete the tire makers' Phase III initiative to add annual capacity of 5 million passenger car tires and 1.2 million truck/bus tires, ZC Rubber said.

On the other side of the ledger, Bridgestone, Michelin and Toyo Tire Corp. closed plants in the past year and Continental is planning to shut one by year-end.

Bridgestone closed its truck, farm and OTR tire plant in Port Elizabeth, South Africa, last November, closing the books on that factory's 84-year history. Bridgestone cited the unprofitable nature of the factory's bias-ply manufacturing capacity for its decision to shut the plant, originally opened by Firestone Tire & Rubber Co.

Michelin closed its Roche-sur-Yon, France, truck tire plant in late 2020 as part of a wider restructuring program across Europe. The move took out 1.2 million units of annual capacity.

Since then, Michelin has supported efforts to convert the 47-year-old structure into an innovation cluster for sustainable energy.

Toyo Tire Corp. dissolved its Silverstone Berhad subsidiary in Malaysia and closed the unit's car, truck, farm and industrial tire plant in Kamunting, Malaysia.

Toyo earlier said it would transfer the 32-year-old plant's production capacity of 3 million units to its Toyo Tyre Malaysia Sdn. Bhd. subsidiary nearby and discontinue the Silverstone brand.

Continental is planning to close its car and light truck tire plant in Aachen, Germany, by year-end 2021, idling up to 8 million units of annual capacity.

The factory opened in 1931 by then-independent Belgian tire maker Société du Pneu Englebert, which became Uniroyal-Englebert in the late 1950s. Continental acquired that company in 1979.