By Bruce Davis, Tire Business staff
Akron, Ohio — Led by billion-dollar investment commitments by Hankook Tire Co. Inc., Bridgestone Corp., Group Michelin and Goodyear, the global tyre industry announced nearly $10 billion (Euro 6997 million) in capacity expansions in the past 12 months, the highest one-year total on record.
The total, which edges past the $9.6 billion recorded in 2007-08, does not include an estimate for what Continental AG might spend on a greenfield tyre plant it’s planning to build in the U.S. That would add $500 million or more to the total, according to comparisons with other similar projects.
South Korea’s Hankook tops the list this year with its commitment of $1.44 billion for new plants in China and Indonesia and a research and development centre in Korea.
Bridgestone checks in at No. 2 with $1.15 billion, including $135 million at its Aiken County, South Carolina car tyre plant. Group Michelin has committed $1.1 billion to new projects, including $250 million or so in the US.
Goodyear’s billion-dollar commitment includes $500 million to convert its plant in Santiago, Chile, to higher value passenger tyres.
The industry-wide investments cover 16 new plants and represent nearly 370 000 units of daily new tire capacity, including 325 000 units of consumer (passenger and SUV/light truck) tires, according to Tire Business’ analysis of the available data.
This contrasts with three plant closings announced in the past 12 months, representing about 80,000 units of daily capacity.
Asia/Pacific accounts for nearly two-thirds of the budgeted investments, with Latin America getting $1.4 billion, or nearly 15 percent. Europe garnered a bit more than $1 billion and North America is getting $921 million, although Conti’s greenfield plant project is not part of that figure.
Looking at the major players’ annual capital spending from a fiscal point of view, Hankook and Cheng Shin/Maxxis International devoted the most percentage-wise to capital expenditures in fiscal 2010, 16.2 and 14.3 percent, respectively.
As an industry, the major players devoted 6.4 percent of sales to capital spending projects last year, Tire Business’ analysis shows. At the lower end of the scale were Cooper Tire & Rubber Co. and Titan International Inc. at 3.3 percent.
In terms of spending on research and development, Continental topped the list at 5.6 percent, although spending by the firm’s tyre businesses was noticeably lower at 2.2 percent. Otherwise, Hankook’s 3.5 percent of sales spent on R&D topped the list.
The industry-wide average for the major tyre makers was 2.5 percent.
Individually, new plants and major expansions announced in the past 12 months include:
China’s Aeolus Tyre Co. Ltd. is building a passenger tire plant in Jiaozuo, Henan Province, reportedly capable of making 5 million tires a year. Local media put the investment at roughly $150 million.
Indian tyre maker Apollo Tyres Ltd has boosted the size of the investment for a previously announced passenger and truck tyre plant in India’s Tamil Nadu province nearly sevenfold to $462 million. The plant was scheduled to start production of passenger radials last year and reach capacity of 100 tonnes per day by early 2011, then double to 250 to 300 tons by 2012 and expand again to 400 tons by 2013.
Apollo is targeting employment at the plant at 2200.
For the full story, including a comprehensive look at projects being carried out by major tyre companies such as Hankook, Pirelli and Michelin, is available on Tire Business.
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