Whether its raw materials, machinery, research and development or the latest manufacturing trends, this tag provides up-to-the-minute insights into the upstream part of the tyre industry.
Logistics company Menlo Worldwide Forwarding has been awarded “a multi-million Euro” contract to handle the day-to-day airfreight shipments from Continental Temic’s manufacturing plants in Manila, Philippines, to Frankfurt. A sister company to MWF has developed a bespoke warehouse management system specifically for Continental Temic.
Cooper Tire & Rubber has signed an agreement with Hangzhou Zhongce, whereby the Chinese manufacturer will produce 250,000 – 350,000 radial medium truck tyres (RMTs) a year. Moulds and other equipment are being transferred to China from Cooper’s plant at Albany, Georgia, where all of Cooper’s RMTs are currently manufactured. Albany makes 25,000 tyres daily, of which 1,200 are RMTs and the plant employs 1,500 workers. The Chinese-made tyres will be produced under Cooper’s brand names and will be manufactured according to Cooper’s technical specifications.
In India, Apollo Tyres has signed a Memorandum of Understanding to set up a tyre manufacturing plant at Vadodara (previously known as Baroda). The project entails an investment of six billion Rupees (112.7 million Euro) but details of product types, capacity etc. are not known.
The Goodyear Tire & Rubber Company has stated that its new labour contract with the United Steelworkers of America (USWA) meets the operational flexibility and cost-savings goals established prior to the negotiations. “Our goal for these negotiations was to achieve what some thought was impossible: a fair agreement that contributed approximately 1 billion dollars in cost savings and cost avoidance over its three-year term without a work stoppage,” said Robert J. Keegan, Goodyear chairman and chief executive officer.
Goodyear Dunlop Tyres UK Limited has announced that it has initiated an information and consultation process with Union Representatives regarding possible redundancies as a result of the removal of car and radial light truck tyre production at its Plant in Wolverhampton, West Midlands. The company has advised the UK Department of Trade and Industry and our Unions today that we will be ceasing production of car and radial light truck tyres in Wolverhampton and that up to 420 associates could potentially be affected. The remaining production from Wolverhampton is unaffected by this decision, with tractor tyre manufacturing and other processes used in tyre production, such as mixing, calendering and retreading, continuing on the site.
Murray & Roberts has sold 50% of the business of AWI South Africa to Borbet GmbH of Germany, with effect from 1 July 2003 and subject to approval by the competition authorities.
A number of tyre companies have published financial results for the first half of the year, with figures varying from not-so-good to impressive. These are analysed in detail in the magazine, but some brief highlights are as follows:
Michelin: Sales were down 6 per cent to 7.348 billion Euro, but excluding currency effects, this would be a rise of 4.4 per cent. Operating profit rose one per cent to 578 million Euro and net income was 165 million Euro; below what was expected, but this was almost entirely due to charges of 178 million Euro for restructuring in Spain, where 1,200 jobs will go over the next three years.
At an analyst meeting, Michelin executives were extremely cautious concerning the outlook for the rest of the year, forecasting a drop in volume for the second half and only a slight improvement in the impact of currency fluctuations. Other obstacles to improvement are the continuing high costs of raw materials and the continuing losses of the recently-acquired Viborg chain. The acquisition was a major factor in the 0.1 billion Euro increase in Michelin’s debt, to 3.9 billion Euro.
Goodyear: Second quarter (Q2) figures reveal that the company lost $73.6 million, compared to a net income in Q2 last year of $28.9 m. Sales were up nearly 8 per cent at $3.8 billion (3.5 bn), but volumes were down half a million units to 52.8 million pieces. The single most important factor in the deterioration of operating performance was an increase in raw material costs of around, $124 million, said Goodyear, even though this was offset in part by cost reductions, improved price and mix and a positive currency translation benefit of some $9 million.
The net loss for the first six months of the year was $236.9 million (1H 2002: $34.3 million loss). The 2003 figures included a rationalisation charge of $78.6 million to cater for staff reductions, while the 2002 figures were boosted by an income benefit of around £10 million as a result of the Ford tyre replacement programme. Sales for the first six months of 2003 reached $7.3 billion; 7.6 per cent up on the 1H 2002 figure of $6.8 billion. Tyre unit volume was down at 105.4 million units (106.3 m).
Continental: 2Q results exceeded the forecasts of industry experts. Compared with 2Q 2002, turnover was down 3.4 per cent to 2.825 billion Euro (2.925 bn), but operating income rose 11.3 per cent to 216 million Euro (194 m), against a forecast of 187 million Euro.
Of the four divisions, Car Tyres, Truck Tyres and Continental Automotive Systems (CAS) all showed slight reductions in turnover compared with 2Q last year, while ContiTech was up slightly. When it came to operating income, however, Truck Tyres was the only sector to show a decrease, while the best performance came from Car Tyres, which posted a 44.2 per cent improvement.
The group’s operating margin was 7.6 per cent and, while the car tyre and truck tyre divisions were slightly below this (6.7 and 7.4 per cent). ContiTech and CAS achieved 8.5 and 9.0 per cent respectively. Industry analysts were pleased at the figures, saying that the group is exhibiting “improving internal dynamics and a favourable mix of businesses with some growth and some cash flow contributors.”
Trelleborg Wheel Systems: TWS achieved sales for the first half of the year of 1,470 million Swedish Kroner (SEK), or 160.2 million Euro. Operating profit was up 33 per cent to SEK 84 million (9.15 m Euro), compared with last year’s first half figure of SEK 63 million (6.87 m Euro). During the second quarter, turnover was SEK 713 million (77.7 m Euro) and operating profit was SEK 39 million (4.25 m Euro).
Operating profit was favourably affected by the company’s restructuring programme, an improved product mix and increased productivity. High raw material prices were partially offset by price increases, especially in farm tyres.
Bridgestone Corporation has announced that it will increase production capacity of truck and bus radials at three plants in Japan, and will double the planned capacity at a plant currently under construction in Thailand. The reason is to cater for continuing growth in global demand for truck and bus tyres.
Production at the three Japanese plants at Amagi, Tochigi and Tokyo will increase to 1,300 tyres per day, thanks to an investment of two billion Yen (US$16.86 million), with expansion work expected to be complete by the end of 2004.
In Thailand, subsidiary company Bridgestone Tire Manufacturing (Thailand) Co. Ltd., has doubled the capacity originally planned for the plant it is building in Chonburi. Construction work began in February this year and the plant will begin production in the second half of 2004, with a daily production of 2,500 tyres. The latest expansion plans will see this increase to 5,000 tyres a day by the end of 2006, and they will cost seven billion Yen ($59 m), bringing the total investment in Chonburi to 24 billion Yen ($202.3 m).
These projects are part of Bridgestone’s on-going, global plans for expanding production capacity in radials for trucks, buses and passenger cars. Car tyre investment will address the shift in demand towards larger sizes and high-performance tyres in the mature markets of North America, Europe and Japan. At the same time, it will cater for growing demand for standard tyres in Asia, the Middle East and Africa.
The Bridgestone group has earmarked around 90 billion Yen for its capital spending programmes by the end of 2006.
In a groundbreaking move at Goodyear the company has agreed to giving the United Steelworkers of America a seat on the board of directors. In return, the union members will give up raises for three years, pay more for health care and accept smaller pensions. Those are key points in a contract agreement reached last week by the company and the United Steelworkers of America. Union members will vote on the contract by mid-September.
In Romania, the Authority for Privatisation and Management of State Ownership has sold its 69.984 per cent stake in local steel cord manufacturer S.C. Cord S.A. Buzau for a figure of around 10 million Euro. The purchaser was Pirelli.
VW is set to invest six billion Euro over the next five years to double capacity at its two Chinese joint venture plants to 1.6 million vehicles a year. The company is also looking for new manufacturing sites in China. The initial one billion Euro investment in the factory at Changchun will be funded entirely from revenues from the Chinese market.
An article in Asia Times quotes Eric Jugier, chairman of Michelin (China) Investment Co. Ltd., as saying that the company still considers China “an ideal investment destination for the world manufacturing industry”. He is also quoted as saying that Michelin plans to turn its operations in mainland China “into its biggest manufacturing base in the world”.
In North America, Ford and GM are encouraging their suppliers to produce more parts in China, not only to support locally-made vehicles, but to enable them to match a “world price”, based on a Chinese price. The companies offer a deal where, if a supplier builds a factory in China, it can sell to Ford and GM factories in North America. GM Europe denied that it was pressurising suppliers to re-locate, although if a supplier asked GM how he could cut costs, he might be advised to move to China or Korea.
The new Pirelli North America Tyre factory at Rome, Georgia has been named as the recipient of the 2003 Robots & Vision User Recognition Award for its MIRS robotic tyre manufacturing process. Pirelli is the fourth winner of the award, which is presented every two years at the International Robots & Vision Show and Conference.
The cornerstone has been laid for Peugeot Citroen’s new factory in Trnava, Slovakia. Vehicle production should begin in 2006, with an annual capacity of 300,000 units, employing 3,500 staff. The project represents an investment of 700 million Euros and is part of PSA’s strategy to move manufacturing closer to expanding markets. In March this year, PSA’s market share in the six Central European countries of Croatia, Hungary, Poland, the Czech Republic, Slovakia and Slovenia was 13.6 per cent, compared to five per cent five years earlier.
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