Sailun enters JV for Mexico tyre plant

Sailun Group is partnering to build a new factory in Mexico. Through its wholly owned subsidiary Sailun International Holding (Singapore) Pte. Ltd., the Chinese firm signed a joint venture agreement with TD International Holding and Sapide CV (TD Mexico) on 15 December. The partners will build a facility capable of producing 6 million semi-steel radial tyres annually and are also considering the future establishment of capacity to produce 1.65 million all-steel radials a year.

The facility will be located in the Marabis Comonfort Industrial Park, in Mexico’s Guanajuato state. Sailun and TD Mexico are investing a total of US$240 million in the project, including $192.78 million during the 12-month construction phase. Once completed, production will take place 24 hours a day, 340 days a year, with four shifts working six hours apiece. The joint venture company will directly employ 410 people in production, along with a further 248 auxiliary production workers.

Full capacity in 2nd year

During the first year of operation production will reach 70 per cent of the planned capacity, increasing to 100 per cent in the second year and thereafter. According to Sailun, the facility will achieve an annual revenue of $219.42 million after reaching full production, with an annual net profit of $4.06 million.

The joint venture’s name is SL and TD (Mexico) Tire Manufacturing Co. Ltd. The company has a registered capital of US$120 million, with Sailun Singapore investing $61.2 million, or 51 per cent of capital. The partners will appoint three directors to the joint venture’s Board of Directors; Sailun Singapore will nominate two, including the chair, and TD Mexico one.

TD Mexico is the parent company of Tire Direct, the largest tyre distributor in Mexico. Sailun anticipates that the joint venture factory will help it better serve customers in North America, which will be the main market for tyres produced in the Mexican plant. The absence of trade barriers will also enhance the tyre maker’s competitiveness within the region, with Sailun stating in the project’s feasibility study that it will “make full use” of regional import/export tax policies throughout the supply chain.