Since the start of February the previously low profile company has reported plans to build a half billion dollar OTR tyre facility in the U.S. and shared news of a “big” acquisition offer, which it claims to have declined on the grounds of conflicts between an outright acquisition and the firm’s current development strategy.
Making the news for a third time in little over a week, on Feb. 10 American Tire Corp. announced a sweeping host of across-the-board price non-increases. According to the company’s press release “American Tire Corp. has decided to maintain its OTR tyre prices at current levels while other U.S. tyre manufacturers have increased or are planning to increase their prices from the beginning of 2008.” The company further promises that “no price increase will take place this year.”
The promise of no price increases over the course of a year in an uncertain market is a gesture rarely seen in a business where profit margins have been whittled away by increased raw material and transportation costs. The decision appears all the more extraordinary in light of the company’s recently announced plans to build what would be one of the most expensive tyre manufacturing facilities ever constructed in the world. American Tire Corp. claims it will build a $500 million radial OTR tire plant at an unnamed site Washington state, and that the plant will be operational yet this year.
A North American-based industry observer has expressed skepticism over the recently reported acquisition offer, and commented to T&A that he remains unconvinced on American Tire Corp.’s ability to deliver on its greenfield facility plans. Whether or not it can deliver a supply of quality OTR tyres at current prices throughout the remainder of 2008 is another issue entirely. (Tyres & Accessories/Staffordshire, U.K.)