Cooper to Invest in Mexican Tyremaking JV

In an effort to boost cost competitiveness Cooper Tire & Rubber is investing in a tyre manufacturing facility in Guadalajara, Mexico. According to an agreement announced June 18 Cooper will have 38 per cent ownership in the facility, jointly owned with Mexican holding corporation IBSA and Cooperativa TRADOC S.R.L. Cooper’s investment in the factory is to be US$31 million. Cooper tyres have been produced at the Guadalajara site since the company’s entry into an agreement with Corporación de Occidente, which was finalised late September 2007.

Cooper chairman, president and CEO Roy Armes said, “This is an important step in the implementation of our strategic plan and our access to cost-competitive sourcing. Securing access to a steady source of supply to supplement the production of our US facilities and meeting the customer’s demands in the North American market is critical to our success. Further, this will help us facilitate penetration in the Mexico market with our Cooper brand.”

Cooperativa TRADOC SCP president and parent company Corporación de Occidente Vice president Jesus Torres Nuño added, “This agreement highlights the importance for the company to join with specialised labour with a commitment to high-quality products and efficiency. Further, as this alliance combines all parties’ strengths, the factory is expected to be one of the most reliable and efficient plants in North America.”

Jose Antonio Suárez Hernández, executive director of Corporación de Occidente commented about the agreement, “Cooper is definitely the ‘world class’ partner we were looking for to succeed in the global tire market. This long-term agreement will allow important synergies that will take our plant to a high efficiency level and the ability to become a quality producer for the world market.”

In October 2007, Cooper announced a 50-50 joint venture to form a trading company with Nemet International, SA de CV, responsible for the marketing, sales and distribution of the Cooper and Pneustone brands in Mexico. This trading company will continue to operate as a separate entity. This agreement will also replace the offtake arrangement previously announced.

Corporación de Occidente is the second-largest tyre manufacturing facility in Mexico, is located on 17.3 acres, and currently produces 2.4 million pcr tyres per year. Expansion plans are in place to bring that capacity to an estimated 4.6 million by year-end 2010, and 6.0 million units during 2011. Currently 700 employees work at the facility.

Commenting further, Armes said, “We believe this is another example of our commitment toward competitive cost manufacturing to improve our overall global cost positioning of Cooper tyres and, more importantly, improve our competitive advantage in the North America market. We are pleased with this opportunity and believe it moves us forward as a stronger competitor in an ever-changing global market.”