Mexico: Pirelli to build second tyre factory

Thursday 21st April 2016 | 0 Comments

Pirelli’s existing plant in Silao opened in 2012 and primarily focuses on premium products
Pirelli’s existing plant in Silao opened in 2012 and primarily focuses on premium products

Pirelli has announced a US$200 million investment in Mexico to establish a second factory near its existing passenger car tyre plant in Silao, Guanajuato state. The project to build the facility was announced during yesterday’s visit by Italian Prime Minster, Matteo Renzi, to Palacio Nacional in Mexico City, where he met with President of Mexico, Pena Nieto.

The project will commence this year, and Pirelli anticipates that its second factory in Silao will enter production in 2017. The $200 million investment announced yesterday is additional to the $50 million Pirelli has already earmarked for 2016-17 and the $360 million it has so far ploughed into its production in Mexico. By the end of 2018, investment in both Silao plants will have exceeded $600 million.

The second Silao plant will “employ the group’s most advanced technologies and processes” from the outset, shares Pirelli. The tyre maker aims for a 2.5 million tyre per annum capacity; when added to the capacity of the factory it opened in Silao in 2012, which is expected to rise from around 3 million tyres per annum (end of 2015) to 5 million tyres a year when the initial investment phases conclude, the Silao factories will boast a combined annual capacity of 7.5 million tyres by the end of 2018. The workforce in Silao will grow from 1,400 to more than 1,800.

In a statement, Pirelli shares that: “The new investment confirms the importance of Mexico among Pirelli’s international operations, also thanks to its strategic position which has made it in recent years the ideal base to significantly develop Pirelli’s presence in the NAFTA area, a market which has been confirmed as one of the most promising for the success of the premium strategy. In 2015, premium sales in the region grew by 24.3 per cent and accounted for 90 per cent of the total at the local level.”

Production in Silao currently focuses on the premium segment, with output consisting of high performance and ultra-high performance tyres for passenger cars and SUVs. These products are sold in the local market and within the entire NAFTA region. The new plant in Silao will support Pirelli’s manufacturing presence in NAFTA, which began with the opening of its factory in Rome (Georgia, USA) in 2002. Pirelli’s NAFTA sales amounted to €861 million last year, a year-on-year increase of 21.7 per cent (+4.1% per cent net of forex effects) and representing 13.7 per cent of total group sales, up from 11.8 per cent.

Pirelli’s NAFTA area goals include a strengthening of its collaboration with key original equipment partners and the launch of new lines especially developed for clients in the region, to complement existing ‘NAFTA’ products such as the Cinturato P7 All Season Plus, the Scorpion Verde All Season Plus and the Pzero All Season Plus. Pirelli also aims to increase aftermarket sales volumes through an expansion of its FasTrack associate dealer network, the growth of its retail business and via the optimisation of customer inventories through geomarketing.

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Category: Company News, International News