Continental Sime expands Malaysian Factories

Continental AG is to spend RM200 million (£30 million/44 million euros) on expanding its Malaysian units’ Petaling Jaya, Selangor, and Alor Star, Kedah, factories. According to reports, the plan is for these facilities to double output. Furthermore, Continental Sime Tyre Sdn Bhd chief executive officer Dieter Saar said the company plans to export 30 to 40 per cent of its output beyond 2006, up from less than 15 per cent now.

The company wants to sell more to the US, Australia, New Zealand, and European and West Asian nations, besides regional markets such as Thailand and Indonesia.

Continental Sime, Saar said, is raising annual capacity at the Alor Star factory to 8 million tyres by 2008, from about 4.4 million pieces now, while the one in Petaling Jaya involves an increase of another 450,000 tyres a year. “The expansions are to cost RM100 million each. We are planning to export 30 to 40 per cent of our output by next year,” Saar told the Malaysian Business Times newspaper.

Upgrading work has already started at the Alor Star factory and it should hit a capacity of 5 million tyres by mid-2006, while work on the Petaling Jaya plant should be completed by the end of next year.

“With a capacity of 8 million pieces, it (the Alor Star factory) will be one of Continental’s greenfield medium-sized plants, comparable to those in Germany, France, Mexico and the US.” The Alor Star factory produces tyres for passenger cars and light trucks. While the Petaling Jaya plant makes radial truck tyres fitted for heavy industrial vehicles.

The move is said to be part of Continental Sime’s integration programme, which began when Continental bought a 51 per cent stake in Sime Darby Bhd’s tyre manufacturing business in October 2003. Saar said the expansion was also designed to defend Continental Sime’s share in the local market. The company now controls about half of the overall tyre market through brands such as Continental, Barum, Sime and Simex, the Business Times reported.