Thailand fire closes Linglong plant
Linglong’s Thailand tyre factory is likely to be closed for the next 30 days as authorities investigate the cause of the recent fire. While six warehousing structures reportedly bore the brunt of the 1 February fire (which caused roughly US$40 million of damage), leaving production free to continue, it seems the size and scale of the fire has prompted a government investigation, which will in turn shutter production for the next month.
The Bangkok post suggests that some 700,000 to 800,000 tyres were housed in the destroyed warehouses – all of which were due for export to the US. Therefore the news is likely to be a blow to China-based Linglong, which strategically invested in Thailand in order to diversify its supply routes. With the US administration charging import tariffs and countervailing duties against Chinese-produced tyres, the closure means managers have to choose between paying through the nose to get its Chinese-produced tyres to the US market and adding up to 30 days extra onto shipping times. Either could prove costly for the company in the short term at least.
Linglong signs chemical supply deal
Earlier in January, Linglong Tire signed a strategic deal with material supplier SI Group (Shanghai) Co Ltd, a subsidiary of US-based chemical intermediates manufacturer SI Group. The deal is designed to speed up research and development, with local news sources quoting Wang Feng, President of Linglong Tire Co Ltd as saying: “Research and innovation in materials are keys to increasing the performance of tyres while maintaining the advantage of comparatively low price.”
According to reports, SI Group Shanghai has been Linglong’s material supplier for some time. And both sides’ strategic deal on Thursday shows growing cooperation between the two companies, according to the tyre company.
Linglong plans to sell 90 million tyres annually during China’s 13th five-year plan (the period between 2016 and 2020), and reportedly aims to enter the top 10 of global tyre manufacturers.