Mexico plant our ‘most technologically advanced’, says Goodyear

Together with Mexico’s President, Enrique Peña Nieto, Goodyear Tire & Rubber chairman and chief executive officer Richard J. Kramer has announced that the tyre maker’s new factory for the Americas will be built in San Luis Potosi. Goodyear says the new factory will be its most technologically advanced plant and have a capacity of six million consumer tyres per year. When it reaches full production, the factory will employ about 1,000 people.

“This is an important investment in Goodyear’s future,” said Kramer. “Our new factory will provide us with a world-class manufacturing asset and will be a strong complement to our existing plants in North America and Latin America. The new plant advances our strategy to serve the needs of our customers and is consistent with our focus on investing in high return projects that drive profitable growth.”

The new factory will be a zero-waste-to-landfill and zero-solvent facility, and will use natural gas, energy efficient LED lighting and state-of-the-art dust collection equipment. Total capital investment for the project will be approximately US$500 million to $550 million, net of government incentives.

Goodyear states that its selection of San Luis Potosi followed an “extensive review of potential locations throughout the Americas.” The review is said to have taken factors including cost structure, logistics, infrastructure, skilled workforce, tariffs and quality-of-life issues into consideration. “San Luis Potosi is an ideal location for the new factory. Its central geographic location will enable us to support our valued customers and consumers throughout North America, Mexico and Latin America,” said Kramer.

But while the new plant will be a boon to the local region and to Mexico, there were losers in the selection process, and one of those losers was the USA – it was initially hoped that the tyre maker would favour its home town of Akron. Responding to Goodyear’s announcement, the United Steelworkers said the decision to build in Mexico was “disappointing but not surprising.” USW International president Leo W. Gerard commented that the union’s past efforts “significantly contributed” towards Goodyear’s North American operations returning to prosperity. “That makes Goodyear’s decision particularly troubling,” he added. “Unfortunately, in today’s world of manufacturing and finance, that’s increasingly the decision corporations make. Our trade policies drive our companies to produce outside the United States, with Wall Street reaping the benefits.”

Demand for high-value-added consumer tyres in North America and Latin America is expected to increase by ten million tyres per year between 2014 and 2019. And when plans for the new factory were first mentioned, Goodyear said it expected that by 2019 it would be able to supply an additional 12 million high-value-added consumer tyres (compared with 2013). Noting that this anticipated demand for Goodyear product outstrips the new factory’s capacity, USW International Vice president Tom Conway says the union has negotiated with Goodyear “to secure significant and specific capital improvement and expansion commitments.” Goodyear reports that the new plant will combine with “investments in its existing US and Canadian factories” to enable it to meet “strong and growing market demand” in North and Latin America, however further details on these haven’t been given.