Michelin plans to build a new plant in Mexico to produce high-end tires for passenger cars and light trucks, the tire maker announced in a press release yesterday (4 July). Michelin will begin the construction of the 142,000-square metre plant in León, Guanajuato state, in the second half of this year. The company will invest EUR450 million (USD500.7 million) in the plant, which is expected to commence operations in the fourth quarter of 2018. For the initial production phase, plant will produce an annual output of 4 to 5 million tires, with plans to gradually ramp up the production.
Commenting on the company’s investment in Mexico, Michelin CEO Jean-Dominique Senard said, “Michelin is building this plant to respond both to sharp growth in Mexico's automobile market and to the confidence that the world's largest car manufacturers have put in us. The largest investment approved by the group in 2016, the new plant reflects our ability to take advantage of growth opportunities in the dynamic North American market and to make our manufacturing operations more agile by deploying tire ranges that integrate innovative technology.”
Significance: The new plant is Michelin’s 21st in North America and 69th worldwide. Michelin currently operates one manufacturing plant in Mexico. The company says the choice of Mexico as the location for the new plant reflects its “commitment to producing its tires as close as possible to the markets in which they are sold”. Most of the high-performance tires produced in León will be produced for the original equipment segment. The new plant’s location is close to production facilities of 18 automakers with operations in Mexico, enabling fast and cost-effective delivery of tires to Michelin’s customers.
Michelin sees North America as a key region in its long-term growth strategy. The company has invested more than USD3.1 billion in manufacturing capacity, infrastructure and other developments in North America since 2011 to support its sustainable growth strategies. In fiscal year 2015, the company witnessed strong growth in its passenger cars and light truck OE (original equipment) tires in the North American market, which grew by 4% y/y on the back of strong vehicle demand and favourable economic conditions.
