Mexico Manufacturing Facility Planned for Goodyear Tires
San Luis Potosi, Mexico, has been selected as the site of a new Goodyear Tire & Rubber Company tire factory that the company says will “meet the strong and growing market demand for high-value-added (HVA) consumer tires in North America and Latin America.”
The new production facility will help enable the Akron, Ohio-headquartered company to meet the anticipated industry demand for HVA tires in the North America and Latin America regions, which are expected to increase by 10 million tires per year from 2014 to 2019, the company says.
With a capacity of about 6 million tires per year, the Mexican factory will begin operations in mid-2017 as a zero-waste-to-landfill and zero-solvent facility, using natural gas and featuring energy-efficient LED lighting and state-of-the-art dust collection equipment.
Goodyear selected San Luis Potosi as the site of its new manufacturing facility after what it says was “an extensive review of potential locations throughout the Americas.” That process, the company says, took into consideration cost structure, supply-chain logistics, infrastructure, a skilled workforce, tariffs and quality-of-life issues, according to Goodyear Chairman and CEO Richard Kramer, who adds that “San Luis Potosi is centrally located, making it an ideal location for the new factory.”
MANUFACTURING FACILITY TOTAL CAPITAL INVESTMENT MAY REACH $550 MILLION
The San Luis Potosi plant will be Goodyear’s first tire-manufacturing plant in Mexico. The firm operates six in the U.S., two in Canada and five in Latin America—in Brazil, Chile, Colombia, Peru and Venezuela.
Net total capital investment for the project will range between $500 million to $550 million when accounting for government incentives. The company says this is consistent with its existing capital allocation plan, which remains unchanged at $1.1 billion for 2015 and between $1.2 billion and $1.3 billion for 2016.
“This is an important investment in Goodyear’s future,” said Kramer. “Our new factory will provide us with a world-class manufacturing asset and will be a strong complement to our existing plants in North America and Latin America and is consistent with our focus on investing in high return projects that drive profitable growth.”
Goodyear faces considerable competition in the Mexican and Latin American HVA tire markets, as there are currently nine tire plants operated by six firms in Mexico—Bridgestone, Continental, Cooper Tire & Rubber Co., JK Tyre & Industries, Michelin, and Pirelli.