Pirelli to Build Emissions Filter Plant in China

In mid-September Pirelli demonstrated its commitment to reducing vehicle emissions in China through the signing of two agreements. On September 15 the Italian firm, along with the Italian Ministry for the Environment, Land and Sea and China’s Ministry of Environmental Protection signed a protocol agreement on the distribution of diesel vehicle emission reduction technologies in China. Pirelli also signed a memorandum of understanding with the Hixih Group to set up a filter manufacturing plant in Shandong Province.

Signing of the protocol agreement took place in Beijing in the presence of the Italian environment minister, Stefania Prestigiacomo, Chinese authorities, and Pirelli Group chairman Marco Tronchetti Provera. The document is part of an environmental cooperation programme launched by the two ministries in 2000, a programme that has seen the implementation of more than ninety joint projects aimed at reducing environmental impact through the development and distribution of state-of-the-art Italian technologies. The agreement foresees collaboration between the three parties in the development of projects for distribution of retrofit particulate emission reduction filter systems and the introduction of new technologies and advanced products, such as those to be jointly produced with the Hixih Group.

The memorandum of understanding signed together with the Hixih Group will allow Pirelli to consolidate the presence it has held in China since 2005. The new factory, whose construction is expected to begin in the first quarter of 2010, will be located near the truck and bus tyre plants developed by the two partners, and Pirelli is confident it will thus create a “diversified industrial hub” able to profit from manufacturing and distribution synergies between the two products. The plant will be developed in stages, with both OE and retrofit particulars eventually produced there. The investment, already included in Pirelli’s 2009-2011 industrial plan, will take market evolution into account and could reach 50 million euros within three years.  Manufacturing capacity could reach around 100,000 filters per year, allowing for the employment of some 1,200 staff.

Technologies for the containment of vehicle pollution represent a highly promising market in China, given the growing attention local institutions are directing towards environmental issues. The joint commitment by the Italian environment ministry and the Chinese environmental protection ministry will focus on the five provinces recently singled out by the Chinese government to adopt measures to control vehicle pollution. Filter systems produced by Pirelli Eco Technology to be distributed here include its Feelpure system, which is able to reduce particulate emissions from diesel engines by more than 90 per cent, and NO2 emissions by 50 per cent. Pirelli filters are already in use on Beijing city buses following a pilot project last year that resulted in the products’ homologation for wider use.

The plan for creating a particulate filter production site represents the Pirelli Group’s third phase of development in China and a further step in its international consolidation. Pirelli has been present in the People’s Republic for four years, since its first truck tyre factory was built in Yanzhou, Shandong province. At the end of 2007, the Group launched a second factory in the region; this facility specialises in the manufacture of high performance car tyres.

The facilities in Yanzhou have to date received investments of more than 2 billion RMB (£181 million). Around 60 per cent of Pirelli’s overall production in China is sold locally, with the remainder exported to other Asia-Pacific markets. The company’s existing facilities employ nearly 2,000 workers and produce 700,000 truck tyres and 2.5 million passenger car tyres per annum. Pirelli’s industrial plan target is to reach about one million truck tyres and about 5 million car tyres in the 2009-2011 three-year period.