The Goodyear Tire & Rubber Company announced it would build a new tyre factory in San Luis Potosi, Mexico to supply customers in the Americas.
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Goodyear chairman and CEO Richard Kramer made the announcement at a ceremony in Mexico City with Mexican president Enrique Pena Nieto.
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The new factory, combined with spending at existing Goodyear US and Canadian factories, will enable the tyre maker to meet the strong and growing market demand for high value added (HVA) consumer tyres in North America and Latin America, Goodyear said. Industry demand for HVA tyres in these regions is expected to increase by 10m units per year from 2014-19.
“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. The new plant advances our strategy to serve the needs of our customers and is consistent with our focus on investing in high return projects that drive profitable growth.”
The new factory, to begin production in mid-2017, will be Goodyear’s most technologically advanced and have a capacity of about 6m tyres per year. When it reaches full production, the factory will employ about 1,000 people.
Goodyear’s selection of San Luis Potosi followed an extensive review of potential locations throughout the Americas. The review took into consideration factors including cost structure, logistics, infrastructure, skilled workforce, tariffs and quality of life issues.
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By GlobalData“San Luis Potosi is an ideal location for the new factory. Its central geographic location will enable us to support our valued customers and consumers throughout North America, Mexico and Latin America,” said Kramer.
The new factory will be a zero waste to landfill and zero solvent facility and will use natural gas, energy efficient LED lighting and dust collection equipment.
Total spend for the project will be about $500m to $550m, net of government incentives, and consistent with the company’s existing capital allocation plan. Its outlook for 2015 and 2016 capital expenditures remains unchanged at $1.1bn and $1.2bn to $1.3bn, respectively.
This latest announcement of yet another auto related factory in Mexico is unlikely to be welcomed by the United Auto Workers (UAW) union in the US.
Following the recent announcement of Ford plans for Mexico, the union said: “The announcement by Ford to invest $2.5bn in Mexico is disappointing but not any more disappointing than GM’s decision to invest $5bn in Mexico or similar investments like FCA Chrysler, Nissan, Mazda, Honda, and now both Toyota and Kia which have announced investments in Mexico.
“The fact is that these companies are taking advantage of slave-like wages and corruption permissible through bad trade agreements. All Americans should be angered that these products are sold in the United States, where American manufacturing workers could have had good paying jobs that respect basic human dignity. It is another example of why the American people should call Congress and say no to Fast Track; say no to more bad trade agreements and demand fair play.
“And as consumers shop to buy cars, they should ask their car dealers where their vehicle of choice is made and choose to buy cars and trucks made and assembled by union members in the USA. It’s time for the American people to use their buying power to help rebuild the middle class and make the United States a strong manufacturing country once again.”
