Pirelli officially opens Chinese truck tyre factory

By David Shaw, ERJ staff

Shandong Province, China-- Pirelli has officially inaugurated its truck tyre factory in Yanzhou, China. The factory currently has capacity for 540 000 tyres per year, and will soon increase to 1.2 million units/year.

The company says it intends to win 3 percent of the Chinese truck tyre market in the coming year, and to grow at twice the market growth rate thereafter.

Pirelli has committed $90 million in 2005, increasing to double that amount within two more years. The increase will fund a car tyre plant on the same site as the existing truck tyre factory.

The current factory is a 60-40 joint venture between RoadOne tyres -- the largest manufacturer of conveyor belts in China -- and Pirelli. RoadOne initially set up the factory 2 years ago using tyre technology supplied by the Beijing Rubber Institute, said Wang Xiao Dong, Manager/Engineer for RoadOne. That has now switched to Pirelli technology following the Italian company's acquisition of a 60 percent controlling share.

Francesco Gori, head of Pirelli Tyres said the process from initial approach to final acquisition had taken 99 days. The acquisition was advised by HSBC Global Investment Banking. Director of Global investment banking for HSBC, Robert Dodds, said the whole process was the fastest Chinese acquisition he had seen at HSBC.

Pirelli intends to use the factory mainly to supply Chinese domestic markets, but also to export to Australia and south-east Asia. Gori said the distribution network inChina is still being developed, but the dealers have similar needs ot ddealers elsewhere in the world, and he expected that Pirelli would be able to meet its targets through the dealers.

At present the tyre factory uses three mixers. Two Chinese and one German. Factory manager Claudio Lacaginna said the Chinese mixers are adequate for most mixing, but silica compounds need the German equipment. Gori added that the presence in China would not significantly affect Pirelli's purchasing strategies for either machinery or ingredients, except to bring new sources of supply of raw materials to fill gaps created by shortages in other parts of the world.

The factory currently has two extrusion lines. A duplex supplied by Berstorff and a triplex from Troester. The company has tyre building equipment from VMI and 54 Chinese-built curing presses.