Bridgestone Considering Russia Factory

Japan Bridgestone Corp is considering building a new tyre factory in Russia, where car production is up almost 10 per cent in the first half of 2006. Russian newspaper Vedomosti reported that Bridgestone has reserved a 10 hectare plot of land near the new Nissan factory in St. Petersburg, which could cost the Japanese company around $30 million.

Dow Jones quoted a Bridgestone spokesman as saying the Japanese tyre maker has not made a final decision on the place or even whether or not to go ahead with project. But with the Russian auto market growing so rapidly, attracting the likes of Toyota Motor Corp, Bridgestone is considering its options, he added: “Given that background, we are feeling some pressure.”

Centre Invest analyst, Maxim Ivanov commented: “In this sense the building of a Bridgestone plant in the neighbourhood with Nissan is most likely not by chance.” In a later report Ivanov quoted Kobayashi Kensuke, CEO of Bridgestone CIS as confirming that the company is looking for a 10 hectare site and is willing to pay between $25 and $70 million for it. Estimated production volumes based on this size range between 800,000 and 2.4 million tyres. In Ivanov’s opinion, Bridgestone will follow the examples of Michelin and Nokian in Russia and will begin with the production of 1 million tyres per year.

Deutsche UFG representative Helen Sakhnova explains that the influence of international tyre manufacturers on the market is increasing: “If in 2004 about 6 per cent of internal production of tyres came from them, then on the sums 2006 their portion will comprise of 19 per cent already.” At the same time sales of Russian produced tyres on the domestic have reduced from 64 per cent in 2000 to 47 per cent of the market in 2006.