BKT Shares Plans for New $100M U.S. Plant

BKT Shares Plans for New $100M U.S. Plant

BKT leadership confirms that plans are underway to finalize the location and begin work on the company’s first U.S. manufacturing facility.

In his 2018 Tire Industry Association Hall of Fame ceremony acceptance speech via video, Arvind Poddar, chairman and managing director of Balkrishna Industries, mentioned that BKT Tires is planning to break ground on a new manufacturing facility in the United States as early as 2019. Currently, BKT agricultural and OTR tires popular in the U.S. are produced in India.

In a follow up to that announcement, BKT leadership confirmed that plans are underway to finalize the location and begin work on the company’s first U.S. manufacturing facility.

Rajiv Poddar, joint managing director of BKT, said talks are underway with several southeast states regarding the plant in an interview with Tire Review on Oct. 31. He said the company will be investing over $100 million in the new facility, which he says will be “ag-centric” with a focus on producing radial tires for agricultural applications. Once phase one is completed, Poddar says the facility is anticipated to produce 20,000 metric tons of tires each year.

“At the board level, we have approval to be closer to the end users and to [build] the North American factory,” says Poddar. “We got the approval I think in the month of September. Since then we are talking to states to first identify the lands for plants that are available. Once we get that, the board will quickly close one of the parcels, hopefully a couple of months from now.”

Once the location has been decided in early 2019, ceremonial shovels will strike soil in the second quarter of 2019. Poddar says work will begin immediately with hopes of completion within 24 months, or around the second quarter of 2021. The company’s U.S. executive offices will remain in Akron, Ohio.

“So basically we wanted to be closer to the end customer,” explains Poddar when asked why the company decided to make such an investment at this time. “There’s a big opportunity in America, so why not come closer to them and give them more. And, of course, the OE market has huge potential, so we will also use the facility to cater to them. That’s something that we’ve not been able to do because of not having a local warehouse or production centers. Transport costs are too high, as are transit times, to get into the OE market.”

Though Poddar declined to share the states currently under consideration, he did say that BKT is looking more toward the eastern part of the United States. He added that the location will have some influence on how quickly the project moves forward.

“We’re talking to states to first identify the location of the plant,” he said. “And from there it depends on how long to prepare the land parcel, which could be anywhere from three to four months after we are signed off.”

In addition to plans for its new plant in the U.S., BKT in 2017 invested $23 million in a new plant for the manufacturing of carbon black. According to Poddar, the decision was made to bring its production in house as part of BKT’s backward integration project, as well as to address environmental concerns with “greener” manufacturing methods used.

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