Pirelli has announced plans to invest USD200 million in its Mexican operations over the next three years, creating 400 jobs and increasing production capacity to about 7.5 million tires annually. The investment includes a new factory in Silao, in the central state of Guanajuato, to supplement existing passenger-car tire production in the city. The investment is in addition to USD360 million the company has invested to date and USD50 million already planned for 2016-17. Production at the new plant in Silao is scheduled to begin in 2017, and the facility will be built to support Pirelli's most advanced production technologies and processes.
Significance: The current Silao plant manufactures premium tires for high-performance and ultra-high-performance cars and utility vehicles, supplying the North American Free Trade Agreement (NAFTA) region. The current Silao facility has a production capacity of about 2.5 million tires per year. Pirelli's NAFTA strategy is to strengthen collaboration with OEMs for original equipment tire needs and to support the launch of tires developed specifically for NAFTA partners, as well as increase its sales in the replacement market. Pirelli's production capacity increase will enable it to supply tires for premium vehicle production coming on line through 2019, including the Audi, BMW, Mercedes-Benz and Infiniti brands. IHS Automotive forecasts North American tire production will increase nominally from 18.2 million units in 2016 to 18.8 million units in 2022 and 19.3 million units in 2026. However, much of the gain is forecasted to be production in Mexico, which will increase from 3.5 million units in 2016 to 4.8 million units in 2022 and 5.2 million units in 2026.
