Low fill rates are a familiar song to North American tire dealers these days, and tiremakers have scrambled to improve their order-delivery situations. Continental Tire the Americas certainly addressed the issue with back-to-back capacity improvement announcements in May.
In mid-May, CTA officially broke ground on a massive expansion of its lone U.S. tire plant, a $224 million project that will add some four million consumer tires to its annual output.
And just days before, CEO Matthias Schoenberg confirmed that CTA will be building a greenfield plant in the U.S., most likely in the southeast.
With graders and scrapers hard at work in the background, Schoenberg was joined by state, county and local officials, numerous key customers and CTA employees to officially unveil plans for a 438,000-square-foot expansion of CTA’s mammoth Mt. Vernon, Ill., plant.
CTA said increased demand for passenger and light truck/-SUV tires in North and South America was “the driving force behind this investment.”
The expansion will add 444 jobs to the facility, taking total employment there to more than 3,000 people. Schoenberg said CTA’s decision to expand Mt. Vernon came because of the employees. “We are very proud of our employees here,” he said during his speech. “They are the ones who really earned this investment. They are incredibly important to our success.”
CTA received an incentive package of about $22 million from the state in the form of tax credits, training funds and other incentives, according to Dan Seals, assistant director of the Illinois Department of Commerce and Economic Opportunity, who was on hand representing the governor.
Continental said the expansion will be producing tires by December 2012. Of the $224 million earmarked for the project, $171 million will be directed for new machinery and equipment, and $53 million will be directed for building and infrastructure.
Built in 1973 by the then General Tire & Rubber Co., which was acquired by Continental AG in 1987, the Mt. Vernon plant is perhaps the largest in North America, at slightly more than 2 million square feet – more than 70 acres – under roof. The plant currently produces some 27,700 passenger and light truck/SUV tires per day and another 8,100 medium truck radials per day. It is also home to CTA’s truck tire technical center.
A previously announced expansion at the plant is adding medium truck capacity to the tune of 15%, for an annual output of 3.15 million truck tires. Since 2006, CTA has invested $277 million in the Mt. Vernon plant; the new announcement takes that investment to around $500 million.
While celebrating the Mt. Vernon plant expansion, Schoenberg revealed more information on the planned greenfield plant, CTA’s first all-new tire plant in the U.S.
CTA is considering locations in Georgia, Alabama and Tennessee, but a final decision won’t be announced until October. Schoenberg said the tiremaker wants to place the new plant closer to its OE customers and for easy access to key replacement customers.
He told Tire Review that a site selection firm has been retained to help CTA sort through potential plant locations. Prior to Continental AG CEO Elmar Degenhart’s pronouncement during the company’s annual shareholder meeting in April, which apparently surprised CTA officials, the tiremaker had sent letters to the development departments of multiple states informing them that it was seeking to build a new tire plant.
The responses from those development departments have been compiled and turned over to the site selection firm, which is now doing its due diligence. The key, said Schoenberg, is to find the right mix that is good for the company, good for the community and good for the potential employees.
