Not long after setting up Pirelli’s new sales and marketing offices on 5th Avenue in New York City, the tiremaker is further strengthening its position in the North American market by committing to additional production capabilities with a new tire plant scheduled to be on line by the first half of 2012.
Located in Silao, Mexico, the site for the new greenfield plant is about 350 miles south of the Texas border in the Mexican state of Guanajuato. With a price tag of roughly $210 million, the facility will have an initial daily production capacity of 10,500 passenger and light truck tires. By 2015, Pirelli estimates the plant will be able to produce 14,000 tires per day, or a maximum of 5 million tires annually. Additional land has been purchased to add capacity down the line.
“We are a brand on the move,” said Mauro Pessi, President & CEO of Pirelli Tire North America. Pessi defined Silao as a location with a good infrastructure, along with a qualified and a very capable workforce that offers competitive labor rates compared to other Latin American countries. In addition, that portion of the region supports very solid transportation corridors with tariff-free status as part of the North American Free Trade Agreement (NAFTA).
About 80% of the tires manufactured at the new facility will go to the U.S. and Canada, noticeably improving distribution of product to North American dealers, according Tom Gravalos, vice president of marketing, motorsports and original equipment for PTNA.
The Silao plant will employ conventional tire production technology, not the same Modular Integrated Robotic System (MIRS) production featured in the tiremaker’s Rome, Ga., facility. MIRS is designed for shorter runs of high performance tires, Gravalos noted. “The two plants now deliver Pirelli a great one-two combination,” he added.
The 120,000-square-meter Mexican facility is part of Pirelli SpA’s five-year industrial plan designed to support projected growth for high performance tires in North America. In addition, the plan calls for added investments in the world’s expanding markets, such as Latin America and the Asia-Pacific region, in order to achieve new sales targets producing an annual average of 8% growth through 2015. The Mexico facility will be Pirelli’s eighth tire manufacturing facility in Latin America.
“Along with the Rome, Ga., facility, this sends a strong message to our customers that Pirelli is committed and is very focused,” Pessi said.
Pirelli will invest $12 million in the Rome plant to add a new compound mixing facility. The addition will assist in supporting the company’s market gains and the 30% sales increase made over the past three years in the U.S. and Canada, Pessi stated.
The company is budgeting a total of $2.65 billion globally for modernization of its manufacturing facilities over the next five years. This budgeted cost for modernization is 27% higher than Pirelli spent between 2006 and 2010.
Pirelli also has made moves to establish a manufacturing base in Russia, agreeing to take over the assets of Sibur Russian Tyres after signing a memorandum of understanding with Russian Technologies and oil major Sibur Holding in Moscow on Nov. 26.
The deal, which is likely to position Pirelli as major player in the Russian market, comes a year after Pirelli signed an initial MOU with Russian Technologies at earlier talks in Moscow and less than a month after news reports quoted Sibur executives as saying the company planned to exit the tire business. According to Pirelli, the latest transaction is expected to close by June 2011.
Tying in with the move into Russia, the tiremaker recently launched the 38th edition of its high-profile calendar in Moscow. Titled “Mythology,” the 2011 calendar features the creative direction of famed photographer and designer Karl Lagerfeld.
