Vipal Invests US$40 million in Mexico Retread Material Factory

Vipal’s International Business Director, Maria Locatelli, explained that Mexico was chosen for the group’s first factory outside of Brazil because it is an “entrance door” to the United States, the world’s largest tyre retreading market, with more than 15 million tyres retreaded annually. For its part, Vipal ranks Mexico as the world’s third largest retread market with 1.8 million tyres being retreaded annually, after Brazil with 11 to 12 million retreads, 75 per cent of which are consumed by the transport industry.

Aguascalientes’ government has reportedly offered some “fiscal advantages,” facilitating the purchase of 32 thousand square metre grounds in the Mexican industrial area of San Francisco, where the factory will be constructed. The plant will take on 225 employees.

In Brazil, Vipal has a network of 300 licensed retreaders across its three brands. In Latin America there are another 50, but the number is expected to reach 80 by 2010 when Mexican customers are factored in. Vipal currently works with nine authorized dealers in Mexico, but following the construction of the new factory the company is aiming to more than double this figure to 20 in 18 months.

According to an official statement on the subject, the plant will serve the local Mexican market, as well as USA, Canada and Central America. Maria Locatelli, explained the new plant will help increase the company’s exports from 11 to 20 per cent of group sales. (About 30 per cent of Vipal’s total product volume is exported). In 2007 the company reported sales of US$ 575 million, only 1 per cent higher than 2006. These figures, a result of holding a dominant 43 per cent share of the Brazilian market, illustrate why Vipal has set it sights on the international markets.

Despite slow sales growth however, the company’s 2007 net profits increased 58,2 per cent to US$55,37 million, mainly as a result of increased margins and favourable exchange rate strategies. 

Vipal currently operates at full capacity in its three manufacturing plants in Nova Prata, Rio Grande do Sul – South Brazil, which can manufacture up to 144 thousand metric tons of rubber per year between. 

In addition to tyre and tube repair materials, Vipal produces the Vipal, Tortuga and Ruzi pre-cured tread brands. The Brazilian manufacturer’s fourth manufacturing unit (capable of producing 72 thousand tonnes per year) will be inaugurated in Feira de Santana – Bahia in July 2008.