Sumitomo Rubber Buys Hwa Fong Thailand Plant

Sumitomo Rubber Industries Inc, has announced its intention to buy Taiwanese tyremaker Hwa Fong Rubber Co’s Thailand plant for 2.36 billion yen (roughly £12.5 million). The factory, which mostly makes tyres for two-wheeled vehicles, has an annual production capacity of 1.2 million units, according to Sumitomo. In addition to two wheel tyres the factory also produced industrial tyre products.

The announcement comes a year after Sumitomo established a new Thai division to sell tyre produced at the company’s new Sumitomo Rubber (Thailand) Co. (SRT) tyre plant in Rayong, Thailand, southeast of Bangkok. Established in May 2005 at the Amata City Industrial Estate, the factory officially began production in December 2006 before being publicly launched in April 2007.

This plant features the company’s “Sun Production System” (also known as the Taiyo Production System), billed by Sumitomo officials as a breakthrough in automated tyre manufacturing. Three components of the Sun System – jointless process, computer control and process coupling system – result in a rounder, more uniform tyre, according to Yutaka Kuroda, president of SRT.

At the time of the Hwa Fong Thailand’s IPO, five years ago, analysts characterised the business as successfully switching towards the growing domestic market with its “Duro” and “Dunlop” brands – suggesting the company began working with Sumitomo Rubber some time before the plants acquisition. Back then the plant held a 40 per cent share of the domestic OEM motorcycle tyre and tube market. At the same time a quarter of production was destined for the domestic market, while the majority (around 40%) was exported to Europe.

Local competitors included Inoue Rubber (Thailand) Plc (IRC), Vee Rubber Ltd., Siam Michelin Ltd. and Camel Industry Ltd.