Sumitomo plans to resume production in North America
Despite the fact that Sumitomo Rubber Industries Ltd. (SRI) is closing its only tire plant in the United States, the company's management believes it is necessary to have its own production in the region.
"I think localized production is the best option for tire companies," said Hidekazu Nishiguchi, managing director of Sumitomo. "Sooner or later, we will have plants near North America again... We believe that by the time we launch new production, the market situation will have changed significantly."
Nishiguchi refused to clarify the company's plans and only stated that the new plant will be created using the latest developments in production digitalization, enterprise resource planning (ERP), and manufacturing execution systems (MES), and will also be carbon neutral.
"The enterprise will use intelligent automated processes, which is especially important given the very high labor costs," he added. "And also equipment that will allow us to produce products with increased added value due to the modernization of production."
Currently, Sumitomo is transferring at least a significant part of the production from the Tonawanda plant (New York) to its site in Thailand, which was opened 18 years ago. In the future, the US market will be supplied with almost exclusively Thai-made tires, and potentially, a plant in Indonesia may become a supplier.
The company notes that the decision to close the plant in the United States was made primarily due to the growth of labor costs. The enterprise was opened over 100 years ago near Buffalo, and it will still be closed, despite the fact that over the past eight years, approximately $350 million has been invested in it. The company's decision was also influenced by factors such as a "price attack" by an unnamed manufacturer, which led to a decrease in prices for passenger tires.
In the first three quarters of 2024, Sumitomo's revenue in the North American market grew by almost 11%, to $1.23 billion, including due to good demand for tires from the Falken WildPeak line for pickups and SUVs. To control costs, a contract was signed with an unnamed shipping company, and Sumitomo adds that even if transportation costs and/or import tariffs rise, "the low cost of products from Asia will make them more profitable compared to tires that were previously produced in the United States."
Sataro Yamamoto, CEO and President of Sumitomo, also touched on the topic of the future of the Dunlop brand, the company's main brand outside of North America and Europe, where the rights to it belong to the American Goodyear. Previously, it was announced that Goodyear plans to sell the famous brand, although recently, the company's CEO and President, Mark Stewart, said they would not rush. According to Goodyear's estimates, Dunlop tire sales bring the manufacturer around $700 million annually.
Yamamoto confirmed that Sumitomo may become a potential buyer of the rights to the brand. "Of course, we are interested in using the Dunlop brand in Europe, North America, and Australasia, as it is a premium brand that can undoubtedly help our development in the future," he said, refusing to clarify whether any negotiations on this issue are underway.
Goodyear received the rights to the Dunlop brand in North America, Europe, and part of Australasia in 1999 as part of a global alliance with Sumitomo and retained them in 2015 when the alliance was dissolved. Sumitomo has the rights to Dunlop in most countries in Asia, Africa, and South America, and in North America and Europe, it uses trademarks such as Falken and Ohtsu.