According to a report in the Wall Street Journal,upon opening its first plant in Mexico’s central state of Guanajuato in late May,Italian tire maker Pirelli announced it plans to invest upwards of $400 million in the country by the end of 2015.
The plant will supply Pirelli’s North American market and will make premium tires for both cars and SUVs for the entire region covered by NAFTA. According to the article,around 30 percent of the tires will be used on vehicles in Mexico,while around 70 percent will be shipped to the U.S. and Canada.
“The Mexican plant will allow the company to serve its key growth markets for premium tires in a more efficient manner,” stated Pirelli Chairman and CEO Marco Tronchetti. “Since the vast majority of the more than 6.5 million Pirelli tires sold in the U.S. and Canada each year are sourced from Brazil,Europe and China.”
The new plant in Mexico will reduce delivery time to four or five days,compared to previous delivery times of 45 days. According to a report on Reuters,the new factory will have an annual output of at least 400,000 units and the tire maker could invest another $100 million in Mexico by 2017.
“This is a country that offers excellent opportunities both because of the positive dynamic of local demand and its strategic position,” stated Tronchetti in a press release,speaking about the benefits of Mexico real estate. “Making it an ideal industrial base to serve the entire NAFTA area.”
The new factory in Mexico is also projected to bring Pirelli lower logistical costs,greater efficiency in customer service and greater production capacity. Pirelli is already the fifth largest tire maker in the world and its new Mexico plant marks the company’s 22nd worldwide to date. Tronchetti also told the Wall Street Journal that he sees growth in the local replacement market for premium tires,due to an increase in premium vehicles in Mexico.