Pirelli Committed to Emerging Markets

At a July 19 ceremony marking the manufacture of their millionth high performance tyre in Romania, Pirelli presented news of its current activities and development plans for the company’s tyre and other vehicle related products. Present for the occasion were, amongst others, Marco Tronchetti Provera, chairman of Pirelli & C. SpA, Francesco Gori, managing director of Pirelli Tyre, plus a number of local authorities.

Marco Tronchetti Provera disclosed to reporters that Pirelli intended to go “where the growth is” when investing in new tyremaking facilities. “We are looking with interest at India,” he said. “We are looking at Russia as an interesting market.” It is believed that Pirelli would prefer to establish itself in these markets from scratch without acquiring established domestic operations.

The company’s desire to establish a presence is emerging markets is evident from its commitment to Eastern Europe, notably Romania, since Pirelli first announced its intention to set up an 80:20 joint venture steel cord plant (with Continental) there in 2004. Some 4,500 tonnes of steel cord are now produced at this facility every year, and as of late last year the Slatina site has also served as a centre for Pirelli tyre production. These began to roll out of the company’s leading edge £115 million facility at the end of October, and by the time the first anniversary of this auspicious occasion is commemorated the plant is expected have delivered a total of two million high performance and SUV tyres onto the local and other European markets.

By the end of 2007 around 1,200 people will be employed at Pirelli’s 500,000 square metre Slatina complex, and work is underway on a third Pirelli factory near the country’s border with Serbia, about 150 km away. Particulate filters for OE fitment will be manufactured at this £17 million facility once it comes on stream in the latter half of 2008, and output will supply the anticipated increase in filter fitment to new diesel cars under Euro 5 regulations from 2011 onwards. With this third facility in place Pirelli’s aim of utilising Romania as a logistics and commercial hub for eastern Europe will be considerably strengthened, and the company will benefit from Romania’s growing importance as a well positioned centre of automotive production.

The Pirelli chairman also indicated the company has contemplated buying back a minority stake in Pirelli Tyre from Speed, a company owned by half a dozen banks. “It’s a question of a financial nature,” said Tronchetti Provera. “If it’s convenient, yes. If it is not convenient, no.” Speed presently holds a 38.9 per cent stake in the tyre division.