Pirelli investing $500m in Argentina greenfield project
Pirelli has announced plans to invest some $500 million in a new truck tyre factory in Argentina that will meet increasing demand for commercial vehicle radials there and in the surrounding region. Construction of the new facility is scheduled to begin early next year and the first phase of development, which will continue until 2014, will require an investment of $300 million in order to give the plant a 700,000 unit per annum production capacity. Second phase development is expected to double the plant’s capacity through an additional $200 million investment and increase its workforce from 700 to 1,200 people.
This project is part of Pirelli’s drive to increase its direct industrial presence in fast-growth markets. The company estimates it 2011 revenues in Argentina will reach $500 million, a 40 per cent increase on 2010, and the country is presently attracting significant automotive industry investment. Pirelli’s truck business unit in South America counts Ford, Scania, Volvo, Man, Iveco, Mercedes and Agrale amongst its clients. At the moment Pirelli satisfies truck sector demand within Argentina with imported tyres; 50 per cent of production from the new facility will go towards meeting this local market demand, with the remainder directed to important exports markets, notably within the Mercosur region.
The plant will be the seventh within Pirelli’s truck business unit; the tyre maker currently operates facilities in Turkey, Italy, Egypt, China and Brazil, where it has two. Pirelli says that, with this plant, Argentina could represent as much as 13 per cent of its global truck tyre production. Product lines manufactured in Argentina will be made using the latest generation SATT technology.
Details of the new factory were announced on October 13 during a presentation of Pirelli’s growth plans at Qinto de Olivos, the Argentine President’s residence in Buenos Aires. Attending the meeting there were President Cristina Fernández de Kirchner, the minister for Industry, Débora Giorgi, Pirelli chairman Marco Tronchetti Provera and the chairman of Pirelli Neumáticos Argentina, Franco Livini. The Argentine government has committed itself to aid the factory project by funding part of the investment at a facilitated interest rate and by guaranteeing the delivery of utilities.