Poland – most likely site for Apollo’s new factory?
Speaking at the launch of the Aspire 4G high performance tyre in Geneva, Apollo Tyres Ltd chairman and managing director Onkar Singh Kanwar reiterated the tyre maker’s commitment to European consumers. “While European companies are looking east, your company, Apollo, is focusing on Europe, and Europe will remain central to our focus,” he stated. “We will keep investing in production facilities, in technology, development and product launches to ensure that the best and most effective products are brought to you. Apollo will accelerate its growth momentum over the years to come.”
Part of this growth momentum is the construction of a second European plant, and a firm decision on the location of this new East European facility is only a matter of months away. Also speaking at the Aspire 4G launch, Apollo vice-chairman and managing director Neeraj Kanwar shared that “as we speak, multiple teams are undertaking a complete due diligence to pinpoint the exact locations, the requirements, the volumes and the product mix” for the new greenfield factory. “And in the next few months, I’ll be able to come back to you with some more details on the East European project.”
Plans for the facility are described by Neeraj Kanwar as being “at the drawing stage” and he confirmed that three locations – Poland, Hungary and Slovakia – head the list. While government incentives play a role, the vice-chairman and managing director named several other factors key to Apollo’s final decision: “We are obviously looking at the economy and stability of government – if you all remember, in 2008 Apollo went into Hungary and we had selected a site, but because of the coalition government in Hungary there was a political fight regarding that land and we pulled out. This time we are going in with a very clear intention of looking at a site where we are close to OE customers and close to a port.” Another priority, he commented, is skilled personnel. “The availability of tyre technologists, tyre engineers, workers, has to exist in that region.” While neither Kanwar nor other members of Apollo’s management team allowed themselves to be drawn into speculation over which site was favoured, it is no secret that Poland’s automotive industry is much larger than that of Slovakia and Romania, the country is politically stable and is the only one of the three to possess ocean harbour facilities.
According to Rob Oudshoorn, Apollo Vredestein’s chief of Europe operations, the European Union states will be key target markets for output from the new plant, along with other interesting markets such as the Ukraine. Neeraj Kanwar added that Apollo considers it critical to be able to manufacture within the market it sells in. Describing how the new facility will be equipped, he said it would “outstrip Chennai (Apollo’s greenfield plant in India, which entered operation in 2010) on all parameters.” Kanwar added: “What I can say with confidence is that this plant will be one of the most modern and technically sophisticated tyre manufacturing facilities in the world, with maximum deployment of green and environmental-friendly processes and materials.” The plant will also employ close to 900 people and involve an investment of almost 200 million euros over the next five years.
Other target markets
Important as Europe may be, Apollo’s attention to our region does not mean it is neglecting other areas. Neeraj Kanwar shared the company also has several other regions in its sights, namely Latin America, the Middle East, Southeast Asia and Africa.
“We have already started a sales and marketing office in Brazil, from which we are trying to seed the market,” reported Kanwar. “We are selling truck tyres and passenger car tyres from India and from South Africa into Brazil. We are looking at seeding the market first; we don’t have any immediate plans for any manufacturing facility in Brazil.” Whether or not this changes depends on how Apollo is received there – Apollo is, after all, a strong believer in manufacturing where it sells.
China, however, is not an immediate priority for Apollo. While the company sells small amounts of Apollo and Vredestein-branded tyres there, the vice-chairman and managing director says it “does not have plans right now to enter that market.” He said Apollo would first look to Southeast Asia before setting China as a goal. Other regions singled out for Apollo’s attention are, as mentioned above, the Middle East and Africa. “We believe Africa has a lot of opportunities, South Africa is our gateway into the African continent,” Neeraj Kanwar commented.