Cooper Tire considering its options in China
Although Cooper Tire & Rubber will retain offtake rights for tyres produced by the Cooper Chengshan (Shandong) Tire Company Ltd (CCT) plant in China after its ownership is fully transferred to Chengshan Group Company Ltd., the tyre maker is nevertheless looking for an alternate supply of tyres in China. Several options are under consideration; company chairman, chief executive officer and president Roy Armes outlined these at Cooper’s third quarter earnings call on 7 November.
Armes began by reiterating the status quo, confirming that Cooper received notice of the Chengshan Group’s intention to exercise its option to acquire Cooper’s 65 per cent stake in the CCT joint venture. “And after reviewing the documentation and working with the Chengshan Group, to confirm the necessary steps to move forward, we are proceeding with the proposed sale of our interest in CCT in accordance with the process set forth earlier this year.” If the deal is completed, Cooper will retain offtake rights through to mid-2018, he added.
Yet China will continue to be an “important part” of Cooper’s long-term growth strategy after this date, and therefore another option – or a combination of options – look set to fill the void left by the demise of the CCT joint venture. “We are also looking for other sources of supply, regardless of the outcome of the ultimate ownership of CCT, which could take a variety of forms, such as an agreement with another Chinese supplier, making an acquisition, adding capacity to our wholly-owned CKT (Cooper Kunshan Tire) plant, buying a facility and running it ourselves, or just building a new plant,” stated Armes, adding that Cooper has “the financial wherewithal” to choose any one of these alternatives or a combination of them.
“We are focused on increasing our business in China, because it’s a market that’s growing strongly in both OE and replacement tyres, and it’s the largest TBR market in the world,” the Cooper boss continued. “In fact, China is expected to become the world’s largest overall tyre market in the next few years. The most important thing to remember, is that our Asian strategy remains intact, and we intend to have a significant presence in China, and grow our business over time, in both the replacement and OE markets, and we have proven we can be successful in those markets.”