Mexico is becoming a "tire powerhouse"
Just 20 years ago, Continental and Goodyear were planning to close their plants in Mexico, and the local JK Tornel (owned by India's JK Tyre) was facing serious financial difficulties, but now, thanks to foreign investment, the country may become the fifth largest tire producer in the world, writes Tire Business.
In just the last six months, three companies, Japanese Yokohama and Chinese Sailun and ZC Rubber, have announced that they will localize production in Mexico, with total investments exceeding $1 billion, and the capacity of the three new plants will be more than 24 million passenger and light truck tires per year.
According to TB, the current nominal capacity of the six Mexican plants (Bridgestone, Continental, Goodyear, JK Tornel, Michelin and Pirelli) is more than 60 million passenger/light truck tires per year, and the local industry as a whole can supply more than 65 million passenger/light truck and 1-2 million truck tires per year. Thus, the new plants will increase tire production for the consumer sector by 35%, while Mexico is already the second largest supplier of passenger tires to the US.
In 2023, 22.8 million passenger and 1.79 million light truck tires worth over $2 billion were imported to the United States from Mexico, with the country's share of foreign supplies being 14% and 5%, respectively. The new plants will predictably be oriented towards supplies to the US, as stated by representatives of the companies that launched the investment projects.
Yokohama has been talking about Mexico as a potential location for a plant since 2016, and now about 26% (1.62 billion dollars) of the company's total revenue in the tire market comes from North America. At the same time, ZC Rubber notes that the opening of a plant in Mexico will "allow for more efficient service to customers in both North and Latin America".
No company mentions the cost of labor in Mexico, but a study by IVEMSA shows that an hour of work by an employee in the US, including paid vacation, bonuses, etc., costs $23, while in the country south of the border it is $5.3, and Mexicans usually work 48 hours a week.
An additional stimulus for the Chinese is that not so long ago, the Mexican authorities approved the introduction of anti-dumping duties on passenger and light truck tires from the PRC in the amount of up to 32.24%. The petition to increase tariffs was filed by Bridgestone, JK Tornel, Continental and Michelin, and the new duties were established for the import of pneumatic radial tires with a diameter of 13-22 inches, 35-85 series. For most Chinese tire suppliers, such as Nexen, Giti, Doublestar, Hankook and Kumho, tariffs of 21.77% have been introduced.
Photo: Pixels.