Tire industry commits nearly $5 billion for capacity expansions

AKRON — Capital spending on new capacities by the world’s leading tire makers in the past 12 months was up marginally over 2018-19 at nearly $5 billion, with the bulk of the investment going to projects throughout Asia.

With the exception of a pair of new plant projects in Africa and Cooper Tire & Rubber Co.’s recent disclosure of a $55 million investment in its plant in Serbia, the remainder of the $5 billion in investments tracked by Tire Business come from companies in China and India.

The total includes eight greenfield tire factories:

  • China’s Qingdao Doublestar Group is working with partners in Algeria and Pakistan on building tire plants in those countries.
  • China’s Guizhou Tyre Co. Ltd., producer of the Advance and Samson brands, is building plants in China and Vietnam with more than 4 million units of annual commercial tire capacity combined.
  • China’s Jinyu Tire Group Co. Ltd. has broken ground on a truck and bus tire plant in Tay Ninh, Vietnam, rated at 2 million tires a year.
  • China’s Linglong Group is planning to build a fifth tire plant in China, in Changchung, rated at 12 million passenger, 2 million truck/bus tires and 200,000 truck/bus retreads.
  • China’s Chaoyang Long March Tyre Co. Ltd. is working with Pakistan’s Service Industries Ltd. on a joint venture in Pakistan to oversee the construction of a radial truck/bus tire plant there.
  • China’s Shandong Haohua Tire Co. Ltd. plans to open a radial car and truck/bus tire plant in Sri Lanka with an eventual annual capacity of 20 million units.
  • Russian’s P.J.S.C. Tatneft — parent company of Russian tire maker Nizhnekamskshina — has agreed to work with Kazakhstan automotive manufacturer Allur Group to build a tire plant in Kazakhstan rated at 3 million passenger and light vehicle tires as well as 500,000 truck tires a year.

All told, the expansion projects tracked by Tire Business represent more than 31 million units of new annual passenger/light truck tire production capacity and 16 million units of truck/bus tire annual capacity, plus a few million units of motorcycle tire capacity.

In addition, as many as a dozen new plants have been commissioned in the past year, adding up to 46 million units of new capacity for passenger/light trucks and 10 million units of truck/bus tire capacity to the industry’s ledger, as well as several thousand metric tons of OTR tires.

By contrast, there are only three factory closings of note to report, comprising just a few million units of capacity.

At the same time, capital expenditure spending by 25 of the largest publicly held tire makers fell slightly last year versus fiscal 2019, with the leading tire makers devoting 7.4% of their sales revenue to cap-ex spending last year, according to Tire Business’ analysis of their financial figures.

This compares with an average of 7.6% the year before.

Finland’s Nokian Tyres P.L.C. and India’s Balkrishna Industries were the leading investors in 2019, based on spending intensity. The two companies devoted 18.8% and 18.4% of sales to capital expenditures, respectively.

In terms of spending on research and development, the world’s major publicly held tire companies spent 4.2% of their revenue in fiscal 2019 on R&D activities, up a couple of tenths of a percentage point over a year ago. (See table below.)

Those reporting R&D spending committed from 0.7% (Titan International) to 7.6% (Continental) of their sales to the line item. Conti’s ratio is skewed to a degree by its extensive automotive-component businesses; by contrast, the tire division’s R&D spending was 2.6%.

Some of the larger expansion projects announced in the past year (listed alphabetically) include:

Cooper Tire & Rubber Co.

Cooper plans to invest about $55 million at its plant in Kruševac, Serbia, to expand capacity by about a third and broaden the site’s production portfolio.

The work at Cooper Tire Serbia includes equipment improvements and expanded space to allow for the production of larger diameter tires that are more in demand and to accommodate some capacity being relocated from Cooper’s plant in Melksham, England.

The work also is creating a footprint that would allow for the further doubling of capacity in the future with additional equipment and manpower, the company said.

Guizhou Tyre Co. Ltd.

Guizhou Tyre, producer of the Advance and Samson brands, has broken ground on tire plants in China and Vietnam with more than 4 million units of annual commercial tire capacity combined.

The $310 million plant in China, at the company’s new headquarters site in Guizhou, Guiyang Province, will have capacity to produce 3 million truck and bus tires annually as well a separate production hall for 5,000 “giant engineering tires” — up to 49 inches in rim diameter and weighing up to 3,300 pounds — per year.

In Vietnam — where Guizhou has set up a sales company called Advance Tyre (Vietnam) — the new plant near Ho Chi Minh City will have the capacity for 1.2 million truck/bus tires per year. Phase I calls for the investment of $245 million for 1.2 million units of annual capacity, with Phase II budgeted at $140 million to raise capacity to 2 million units.

Hankook Tire & Technology Co. Ltd.

Hankook is planning to add nearly a million units of annual production capacity for self-sealing passenger tires by 2024 at its 7-year-old plant in Chongqing. The $24 million project will be ramped up in four phases, Hankook said, bringing on stream 184,000 units of capacity at a time.

Jinyu Tire Group Co. Ltd.

Jinyu Tire has broken ground on a truck and bus tire plant in Tay Ninh, Vietnam, that the Qingdao, China-based company said will be rated at 2 million tires a year. Jinyu did not disclose the size of its investment in this factory nor a timetable for completion.

Linglong Group

Linglong is planning to build a fifth tire plant in China, in Changchung, over the coming five years as part of a revised strategy to build itself into a Top 5 global tire maker.

The new plant represents an investment of $700 million and would be rated at 12 million passenger, 2 million truck/bus tires and 200,000 truck/bus retreads, the company said. Linglong plans to break ground this year and open the plant in phases through 2025.

Özka Lastik ve Kaucuk

Özka Tires, a manufacturer of specialty tires and products for the retreading industry, is planning to increase its radial tire production capacity by 55% early next year, with the addition of its second factory in Turkey.

Capacity today stands at 130 metric tons of tires per day. The company did not elaborate on its plans for a second factory.

Qindao Doublestar Group

Doublestar has agreed to work with Pakistani tire distributor MSD Tire & Rubber Co. and Daewoo Pakistan Express Bus Service Ltd. to build a joint venture tire plant in Pakistan.

The new partners are budgeting $220 million for the plant, which is projected to have a Phase One capacity of 1 million truck/bus and 3 million passenger tires a year by year-end 2021. The partners did not say where the factory will be built.

Doublestar will provide technical support and equipment. Tires made at the plant will supply local consumers as well as several regions in South Asia and Central Asia, Doublestar said.

Doublestar also is working with Algerian investors El Hadj Larbi Pneumatiques on a project to build a car and truck tire plant in that north African nation.

The joint venture project foresees a factory capable of producing 5 million passenger and 2 million truck/bus tires a year. The partners did not disclose the plant’s projected location in Algeria.

Doublestar said it will invest just $5 million in the project, with the remainder of the $250 million coming from the joint venture partners.

Sailun Group Co. Ltd.

Sailun Group plans to double capacity for radial truck and bus tires at its plant in Liaoning, China, to 6 million units a year by 2022. Sailun is budgeting $285 million for the project, which will add 1.22 million square feet to the existing Liaoning facilities.

Sailun said about a third of expanded production is targeted for overseas markets such as South America, Africa and other Asian areas.

The company, the No. 18 tire maker worldwide, also announced in January the completion of an expansion of capacity for passenger tires at its Dongying, China, factory, which will boost that plant’s annual capacity to 27 million units a year.

Service Industries Ltd.

Pakistan’s Service Industries and China’s Chaoyang Long March Tyre Co. Ltd. have agreed to set up a joint venture in Pakistan to oversee the construction of a radial truck/bus tire plant.

Located in Pakistan’s southern Sindh province, the $250 million plant will be the country’s first truck and bus tire factory, with production slated to start before year-end 2020.

Service Industries, through its Servis Tyres business unit, will own 51% of the venture, which would build a plant capable of producing up to 600,000 truck tires a year initially. A Phase II expansion would double that capacity.

Servis Tyre is a producer of two- and three-wheeler tires and tubes at a plant in Lahore.

Shandong Haohua Tire Co. Ltd.

Shandong Haohua is budgeting $450 million for a radial car and truck/bus tire plant in Sri Lanka and to expand truck/bus tire capacity at a factory in Weifang, China.

Shandong Haohua, which goes to market under the Aplus, Compasal, Lanvigator and Royal Black brand names, is budgeting $200 million to build a plant in Sri Lanka with an eventual annual capacity of 20 million units and $250 million to expand TBR capacity in China.

The Sri Lankan plant will be located at a site near Colombo, the nation’s capital, the company said. Construction of the project will take 18 months.

Headquartered in Weifang, Shandong Province, Haohua plans to add 3 million units of annual truck/bus tire production capacity at a factory in Weihang’s Shouguang county.

This plant is one of three factories Haohua operates in China. Together they represent annual capacities of 5 million truck/bus tires and 20 million car tires.

Tatneft/Allur Group

Russian energy and petrochemicals company P.J.S.C. Tatneft has agreed to work with Kazakhstan automotive manufacturer Allur Group to build a tire plant in Kazakhstan.

The proposed joint venture project will oversee the construction of a tire factory in a “residential-operations rubber goods production facility” in Kazakhstan. Set for completion in 2022, the facility will produce 3 million passenger and light vehicle tires as well as 500,000 truck tires a year, according to Tatneft, parent of tire maker Nizhnekamskshina.

The partners did not disclose their expected investment in the project.

New plants on stream 2019-20

Apollo Tyres Ltd. commissioned production recently at two plants in India, a car and truck/bus tire plant in Chinnapanduru, Andrah Pradesh, and a motorcycle tire factory in Limbda, Gujarat.

Apollo budgeted $280 million for the Chinnapanduru factory, which is designed to produce 15,000 passenger and 3,000 truck/bus radials per day. Built using a modular layout, the facility’s capacity can be expanded with “minimal” engineering efforts and with economies on investments, Apollo said.

The Limbda plant, dedicated to making radial and bias-ply two-wheeler tires, is central to Apollo’s goal of becoming the leading brand in India’s premium two-wheeler segment, which constitutes nearly 20% of the two-wheeler market in India and which boasts the largest market globally for such tires.

The plant has an initial production capacity of 30,000 radials and 60,000 bias-ply tires per month.

Bridgestone Corp. opened an off-the-road tire plant in Amata City, Thailand, for tires with rim diameters up to 51 inches.

The plant, which opened four years behind schedule, opens with a nameplate capacity of 35 tons per day, producing radial tires for construction and mining vehicles.

The unit is operated by Bridgestone Specialty Tire Manufacturing (Thailand) Co. Ltd. and spans an area of 9.3 million square feet.

CEAT Tyres Ltd. inaugurated production at a car and motorcycle tire plant in Kanchipuram, Tamil Nadu, just 18 months after construction began on the $200 million project.

Chennai, India-based CEAT said the plant, with annual capacities of 28,500 passenger and 2,500 motorcycle tires a day, is its largest car tire plant and claims it’s “one of the most advanced tire plants in South Asia.”

Cooper Tire & Rubber Co.’s joint venture tire plant in Vietnam, A.C.T.R. Co. Ltd., started producing trial-run tires last November, less than a year after Cooper and Sailun Vietnam Co. Ltd. agreed to form the venture.

The plant — located at Sailun’s existing site in Tay Ninh Province near Ho Chi Minh City — is expected to be operational and producing tires on a commercial level throughout 2020. At full capacity, production is expected to be approximately 2 million truck/bus tires annually.

Jiangsu General Science Technology Co. Ltd. (JGST) commissioned production at its car and truck/bus tire plant in Thailand in December, just 12 months after breaking ground on the factory.

Located in Rayong Industrial Zone, the $300 million plant is designed to produce 1 million truck and bus tires and 6 million passenger car tires per year. JGST, which goes to market under the TBB brand, is represented in North America by Statewide Tires Inc. of West Covina, Calif.

Nokian Tyres P.L.C. began commercial-scale production at its plant in Dayton, Tenn., earlier this year, 30 months after breaking ground on the factory and eight months after the start of trial production.

At full capacity, the $830 million factory will be capable of turning out 4 million passenger and light truck tires annually.

Nokian has committed to doubling sales in North America over the 2019-2024 period to approximately $400 million.

Prinx Chengshan Tire Co. Ltd. commissioned production of truck tires at its $300 million plant in Chonburi, Thailand, in March, a year after breaking ground and a few months ahead of schedule.

The plant’s projected annual output for radial truck tires will be 800,000 units at full capacity, but the plant’s capacity, including passenger and light truck tires, will be closer to 4 million units.

Qingdao Doublestar Group started trial production last fall at a passenger tire plant in Shiyan, Hubei Province, that it described as its third “Industrial 4.0” factory in China with full-process smart manufacturing.

The $220 million Shiyan factory plant replaces an older factory operated by the company’s Doublestar Dongfeng Tire subsidiary in Shiyan. The new plant is rated at 1.5 million truck/bus and 5 million passenger tires a year.

Shandong Linglong Tire Co. Ltd. inaugurated production at year-end 2019 of passenger tires at its $875 million plant in Jingmen, Hubei Province, that the company built over an 18-month period.

The new plant, Linglong’s fourth in China, has rated annual capacities of 12 million radial passenger tires, 2.4 million radial truck/bus tires and 600,000 off-the-road tires, the company said.

The opening of this plant, which operates as Hubei Linglong Tire Co. Ltd., represents a “major milestone” in the company’s growth plan, the company said.

Meanwhile, Hankook Tire postponed plans to establish a $318 million truck and bus tire plant alongside its existing car tire factory in Rácalmás, Hungary.

The project, announced in March 2018, involved a new production unit for medium and heavy truck/bus tires, with the capacity of 550,000 units per year. The postponement does “not mean the cancellation of that plan,” Hankook said.

Plant closings — 2019-20

Bridgestone Corp. is closing its truck, farm and OTR tire plant in Port Elizabeth, South Africa, citing the unprofitable nature of the 84-year-old factory’s bias-ply manufacturing capacity. (See story on page 17.)

Goodyear closed its Gadsden, Ala., passenger tire plant in May, the final move in a several-years-long process of scaling down the 90-year-old facility. In its final months of production, the plant was running at between 2,000 and 5,000 tires a day, down from more than 25,000 a day at its peak.

CEAT Tyres discontinued operations at its Rado Tyres Ltd. subsidiary in India last year after exploring “all opportunities to lease-out/sell off its assets.”

Federal Corp. suspended manufacturing at its Federal Jiangxi Tire subsidiary in Jiangxi, China.