Sentury gives Spain, Morocco and Thailand tyre factory updates

At the end of May, Sentury published details relating to the development of its overseas factories. The tyremaker said data for April and May 2023 showed that its production capacity was temporarily unable to meet orders. Therefore, the company believes there is an urgent need to increase production capacity in order to meet customer demand. According to Sentury’s statement, the overseas tyre traders and retailers they cooperate with include Discount Tire, OAK Tyres, Inter-Sprint, American Omni and Turbo Wholesale.

Spanish factory

In July 2022, Sentury (Spain), a wholly-owned subsidiary of Sentury, signed a land purchase contract with Endesa Generación, S.A. for land in Galicia, Spain, covering about 264,000 square metres in order to build a tyre factory. Sentury has prepaid part of the land payment and will pay the remaining fee after Endesa Generación, S.A. completes land levelling and other procedures.

In October 2022, the local parliament recognised the Sentury Spanish factory as a strategic industrial project. Therefore, according to relevant Spanish laws, the project does not need to go through the urban planning permit procedure but only needs to go through the environmental approval and construction permit procedures.

In April 2023, the local Secretaría General de Industria (General Secretariat of Industry) confirmed that the Environmental Impact Assessment (EIA) documents submitted by Sentury’s Spanish factory met its requirements and publicised the EIA information.

At the same time, Sentury (Spain) has submitted relevant documents for the construction permit of the tyre factory to the local government department. Sentury said the Spanish factory would advance the construction permit procedures after the EIA publicity process.

Morocco factory

Sentury plans to use its funds to start the Morocco factory’s construction. In the future, the tyre manufacturer may choose to supplement those funds through bank loans based on the general use of funds.

It is reported that the Moroccan factory has completed the project site selection in Tangier. Sentury said it is “negotiating business cooperation with the industrial park operator, signing a letter of intent for investment and Sentury (Hong Kong) prepaying 10 per cent of the payment”.

Thailand factory

In the first quarter of 2023, Sentury has invested in its information management system. The tyremaker plans to connect its research and development centre at its headquarters with the testing centre at its Thailand factory. It is reported that Sentury will also purchase multiple sets of research and development equipment, such as a high-speed linear friction testing machine and rubber dynamic cutting testing machine, in 2023. The entire project will be implemented by the end of 2023.

In addition, Sentury also revealed that from the end of 2022, the second phase of the Thailand factory was available for use. Tyrepress China understands that the second phase of the Thailand factory is put into production later than initially planned. The tyre company explained that “the impact of the objective environment at home and abroad, China’s equipment export takes a long time, resulting in longer on-site installation and commissioning time at the Thailand factory”.

With the commissioning of the second phase project, the annual production capacity of Sentury’s semi-steel radial tyres reaches 28 million. Data show that in the first quarter of 2023, Sentury’s Thailand factory produced 2.9695 million semi-steel radial tyres and sold 2.9703 million tyres. Among the 2.9695 million tyres produced by the Thailand factory, 1.0228 million tyres came from the production facilities of the second phase of the Thailand factory.

At present, the second phase of the Thailand factory is in the process of finalising and debugging the warehouse and sorting system. Before the new warehouse is used, the Thailand factory temporarily uses the existing warehouse for storage. Sentury expects that the commissioning of the new warehouse will be completed by the end of June 2023.

Overall plan

Sentury said that “the production capacity situation in short supply” and “the changing supply and demand in domestic and foreign markets” made its plan to invest in two tyre factories in Spain and Morocco. After releasing the total production capacity of the two overseas factories that have not been formally constructed, Sentury can produce 46 million semi-steel radial tyres annually.

Sentury plans that the Spanish plant will mainly target the replacement market in North America and the mid-to-high-end OE market in Europe. From the perspective of Sentury’s plan, the Spanish factory will take over the cooperation of the American customers that initially belonged to the Thailand factory. Compared with the additional 17.06 per cent tariffs imposed on Thailand’s tyre factory exporting to the United States, Spain’s exports to the United States currently do not need to pay such fees.

Sentury’s Spanish tyre plant requires higher operating costs than the Thailand factory. However, from the perspective of sea transportation distance, Spain has an advantage in being not so far from the United States, and the sea freight fees that need to be paid during the transportation process will be reduced. These factors mentioned above will affect the price of Sentury products in the United States.

As an essential supplement to the Spanish factory, the Moroccan factory will also be oriented to North America, Africa, the Middle East replacement market, and the Moroccan OE market.

After the Spanish and Morocco factories are completed, Sentury’s Thailand factory may reduce direct supply to North American customers. Sentury has positioned this factory as “maintaining important customers in North America” and gradually shifted to the replacement market in Europe, Southeast Asia and the OE market in Southeast Asia.

The Qingdao factory will mainly target the replacement markets in non-European and non-American regions such as China, South America, Australia, and Japan, as well as the Chinese mid-to-high-end OE market.

Sentury’s “833 Plus” strategic plan explicitly aims to deploy eight production bases in about 10 years, as well as three R&D centres and three user experience centres worldwide. The distribution of the eight production bases will be 3 in China, 2 in Thailand and one each in Europe, Africa, and North America. Spain and Morocco represent Sentury’s investments in Europe and Africa.