Brazil to Receive US$200 Million Pirelli Investments

This year Pirelli celebrates 80 years of doing business in Brazil. In the eight decades that followed the company’s first presence there in 1929, Pirelli has established five factories and a research centre in the South American nation and manufactures 90 per cent of its South American production there. This strong presence reflects Brazil’s growing importance as a strategic centre for vehicle production, and Pirelli’s interest in the region remains strong. At a July press conference, held at the company’s Santo André manufacturing site in Sao Paulo, Pirelli outlined plans to invest a further US$200 million in Brazil over the next three years.

This new investment will take place alongside Pirelli’s 2009-2011 industrial plan and is additional to the $100 million invested last year. The funds will go towards consolidating the Pirelli Group’s leadership in South American markets and one-third will be specifically directed towards research and development, with the remainder earmarked for increasing manufacturing capacity. The company anticipated the new investments will provide for a 20 per cent increase in passenger car and motorcycle tyre production capacity. On the back of these capacity increases, Pirelli is looking to increase Brazil market sales revenue 10 per cent (compared with last year’s sales) by 2011.

“This is a country with a huge potential for growth, especially when you look at the ratio of inhabitants to cars,” said Pirelli chairman Marco Tronchetti Provera. “We want to drive investments, especially in countries where there is desire for growth and development.”

Sales of Pirelli tyres in South America increased 21 per cent between 2005 and 2008 and last year broke the two billion dollar mark for the first time. Brazil market sales, at more than $1.2 billion, accounted for more than 60 per cent of this figure. These 2008 South American sales represented a third of Pirelli Tyre’s overall sales revenue, equal to more than 4.1 billion euros (more than $6 billion).

At present Pirelli employs at least 9,600 workers in Brazil, and the company’s operations there have already benefited from investment in the vicinity of $300 million between 2004 and 2007. During this time manufacturing capacity grew 25 per cent and sales revenue 21 per cent. Currently more than 35 per cent of Pirelli’s Brazil tyre production is destined for export, including to NAFTA markets. Original equipment tyres are also supplied to all manufacturers present near its Brazil sites, including Fiat, Chrysler, New Holland, Iveco, Volkswagen, Audi, General Motors, Ford, Peugeot, Daimler, Honda, Suzuki, Yamaha, Mitsubishi, Toyota, Mazda, Scania and Volvo.

Pirelli in Brazil

Of the seven Pirelli Tyre Group factories situated in South America, five are in Brazil: Feira de Santana in the north of the country, Santo André, Sumaré and Campinas in the state of Sao Paulo, Gravataì in the south. The company’s South American headquarters are in South Sao Paulo, and Pirelli boasts that its Santo André technological and industrial hub, and in particular the research centre located there, is a world class centre of excellence. At the 200,000 square metre Pirelli proving ground in Sumaré, also part of the Santo André hub, testing is carried out on tyres for all vehicle segments.

Research in Brazil focuses on sustainable development in line with the Green Performance targets announced in the company’s 2009-2011 industrial plan. In particular, the Pirelli group says it has a commitment with local authorities to acquire all the natural rubber produced with eco-sustainable methods in the Xapuri region, thus contributing not only to preservation of the region’s environment, but also to economic development of the native populations according to local traditional culture. Pirelli also supports the national Brazilian program for recycling used tyres.