Cooper plans to grow business in China - CEO

Findlay, Ohio — Cooper Tire and Rubber Co has announced that it would continue to seek to expand its China business despite selling its Cooper Chengshan  Tire ownership earlier in December.

The firm announced on 4 Dec that one of its highest priorities is “looking for alternative sources of truck and bus radial tires.” The CCT was Cooper’s only source of truck and bus radial tires, and while off-take agreements with Chengshan are in place until mid-2018, the firm is exploring its options aggressively to fill the capacity.

Roy Armes, chairman, CEO and president of Cooper — said those options could come in a variety of forms, including an agreement with another supplier, a joint venture, an acquisition, adding capacity to its other facilities, buying a facility and running it, or building a new plant.

“We’re focusing on what we have to do in our strategy to grow our business in China. We’ve always said before if there is something that makes sense from a shareholder standpoint or creates shareholder value, it’s something that the board has a responsibility to look at,” said Armes adding that a possible return to Apollo has not been part of the company’s focus so far.

“We’ve been working on this now for several months actually, while we were in parallel with negotiating the agreement in the ownership structure change with CCT. So we’ve already got a head start on this thing. Ideally in 2015, we ought to have some idea of what direction that we’re going, and we can communicate that strategic direction when we get there,” Armes said.

“That’s what I would like to do. Obviously there are a lot of factors and considerations in that. But we have a high sense of urgency in moving forward with an alternative plan.”

Armes said one of his expectations is for Cooper to lay out a definitive direction for sourcing alternative TBR production sometime in 2015.

“We don’t want this thing hanging around forever,” Armes said. “At the same time, we do want to move along at a pace where we can fully understand our risk and evaluate the right approach given what we’ve gone through.”

Part of that plan might include establishing a plant outside of China in light of the recent decision by the US Department of Commerce to levy countervailing duties on tires imported from China. Cooper was assessed a 12.5 percent duty on its passenger and light truck tires produced at its wholly-owned Cooper Kunshan Tire Co. Ltd. facility in Kunshan, China.

While countervailing duties currently do not affect TBR tires imported from China, Armes said Cooper would consider the potential for future duties being imposed when moving forward with its decision to source new TBR capacity.