Goodyear ‘Considering’ $250 million Plant in Yaroslavl, Russia

Goodyear is reportedly considering building a five million unit tyre production plant in the Yaroslavl region of Russia, at a cost of between $200-250-million. According to Russian newspaper Kommersant, Goodyear executives met with regional governor Sergey Bakhrukov at the end of April in order to discuss a particular plot of land. In addition Kommersant reports President Dmitry Medvedev has asked the Russian Ministry of Trade and Industry to consider what investment benefits to offer Goodyear following a request from the regional governor. The plot in question apparently doesn’t yet have any infrastructure.

The next step could be the expansion of the US company’s relationship with leading Russian tyre manufacturer Sibur-Russian Tires. Goodyear has reportedly been running a PCR off-take agreement working in partnership Sibur-Russian Tires’ Yaroslavl Tire Plant for some time. In addition Sibur-Russian appears to be involved in the Goodyear discussions too. Speaking to Kommersant, Igor Karavaev, deputy general director of Sibur-Russian Tires said: “The project really is being discussed…[and]…Sibur is one of the participants in that discussion.”

This suggestion would certainly fit in with Sibur-Russian Tyres’ publically stated aim of setting up a domestic Greenfield passenger car radial production joint venture with a global leader. In an interview during the Brityrex International exhibition last year, Igor Karavaev told Tyres & Accessories that Sibur-Russian would be willing to hand over majority status in a Russian Greenfield PCR production joint venture to the right premium level international manufacturing partner. Despite considering the minority option the company is expected to split any future production capacity the proposed factory would make 50:50.

Commenting on the news Goodyear that had been in discussions with the Yaroslavl governer, Karavaev commented: “The state should support domestic producers first of all and create conditions for the innovative development of Russian enterprises.” He pointed out that the Chinese government requires foreign tyre makers to form joint ventures with local tyre-makers.

According to Kommersant, Russia’s fast-growing car assembly plants in Russia will have to be localized by at least 30 per cent in the future. This suggests that were Goodyear to be unsuccessful with is Yaroslavl project, the company could look elsewhere. Kommersant quoted Goodyear executives as saying that other regions remain under consideration.

Two Western tyre plants are currently operating in Russia. They are the French Michelin, built outside Moscow in 2004, which makes 2 million tyres per year, and the Finnish Nokian Tires plant in the St Petersburg region, which produces 4 million tyres per year and has the potential to increase its capacity to 10 million units per annum.