CGS confirms $44 million Iowa farm tyre plan

ERJ staff report (TB)

Charles City, Iowa -- Czech tyre maker CGS Tyres has confirmed its previously disclosed plan to build a farm tyre plant in Charles City, announcing a $43.8 million investment over 16 months at the Farm Progress Show in Boone, Iowa.

CGS and Charles City officials signed agreements today covering CGS Tyres' commitment to convert an idled Winnebago Inc. plant in Charles City to farm tyre production by January 2012 and calling for additional investments of more than $22.7 million through 2016.

The state of Iowa has committed $924,000 in incentives through its Grow Iowa Values Fund.

CGS Tyres, the tyre business unit of CGS a.s. Holding of Prague, Czech Republic, plans to develop the plant in three stages, depending on demand, with the third stage providing 262 jobs with annual production capacity of 12,200 metric tons of farm radial tyres. Employment initially will be at least 159, CGS said, with about 4,100 tons of annual capacity.

“We bring 78 years of expertise in tyre making,” said CGS CEO Jaroslav Cechura. “US farmers will benefit from our advanced tyres and increased competition.”

In disclosing its investments, CGS said Charles City's proximity to farm equipment makers such as Deere & Co., Agco Corp. , Claas Group, CNH America L.L.C. and Kubota Tractor Corp. was a key consideration. CGS already is a major supplier of radial agricultural tyres for new tractors and combines produced at these companies' European plants.

CGS also cited the city's proximity to Canadian and Mexican OE and replacement markets as well as the size and layout of the plant being suitable for installing both bias-ply and radial manufacturing capacity. CGS plans to make both Mitas- and Continental-brand farm tyres at the plant.

CGS is represented in North America by CGS Tire US Inc. in Charlotte, N.C. CGS Tyres' sales in North America were nearly $11 million last year.

With 2009 tyre-related sales of $318 million, CGS is considered the 43rd largest tyre maker worldwide. In addition to farm tyres, CGS makes Mitas-branded industrial and motorcycle tyres and a variety of industrial rubber products.

From Tire Business (A Crain publication)

Press release from CGS